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The PAP Government Shrugs Off the Decline in Median Income As Not Their Fault But Can’t Hide the Fact Singaporeans Get a Bad Deal

On Thursday December 3rd Ministry of Manpower (MOM) published their figures for 2020 for median gross monthly income from work of full time employed residents, i.e. citizens and PRs. Just to remind readers that if you arranged all the full time workers in Singapore in a line, the median would be the income of the worker at exactly the midpoint.  Median is preferred by economists over mean or average since it will be less distorted by extreme measurements at either end. Mean is invariably higher than median because it is skewed by a small proportion of extremely high earners.

This is MOM’s table:

MOM’s statisticians blame the decline of 0.6% in nominal (before inflation) terms in 2020 on COVID but point out that, according to their figures real incomes have risen by 2.7% p.a. over the last five years and by 2.9% p.a. over the last ten.

However all of the growth in the resident labour force for some time now has come from immigration. New citizens and PRs will tend to have higher incomes and probably be better educated (in order to qualify for PR status under the PAP’s policies) than the median native Singaporean. This will push up the median nominal and real wage but without further information (unlikely to be forthcoming from the PAP) it is impossible to judge by how much but it is likely to be significant  I have written extensively before about the PAP Government’s control over statistics and information generally and their presentation of it in a skewed fashion so as to present themselves in the best possible light. Please read my call for an independent Statistics Authority (Lies, Damned Lies and Statistics).

While the decline may look quite mild the main reason for this is that unemployment has risen sharply and that low-paying low-productivity jobs, which are mainly in the retail and hospitality industries) have been those most affected by the pandemic.There are many reasons why MOM’s calculation of the unemployment rate is artificially low and i have touched on this in previous blog posts but a discussion will have to

However even taking their statistics at face value for the time being they show that the PAP Government’s performance in boosting real incomes has been mediocre when international comparisons are made.

Firstly why are National Servicemen excluded from the statistics when other countries include everyone in full time employment over 16? The fact that the Government pays slave wages to young men forced to give up two years of their lives should be reflected in the median particularly as young workers in other countries will usually be paid less and thus drag down the median.

Secondly should Employer CPF be included in the calculation of the median? It can only be used for housing or healthcare otherwise it can only be withdrawn at age 55 and then only amounts above the lump sum. Even if you use your CPF for housing you have to repay interest on the loan if you sell your property. Workers in other countries such as the UK usually have employer-funded pension contributions and these are not included in the calculation of median wages. In the UK 85% of workers now receive at least 12% in employer contributions towards their pension. The main reasons housing is so expensive in Singapore is because the Government controls the supply and the fact that CPF is used to purchase housing. (Read what I wrote here, here, here and here.) The exorbitant and inequitable cost of housing is even more stark when you take into account that public housing is only 99 year leasehold and that the Government reaps any benefit from redevelopment potential.

In addition workers in other developed countries either receive free health care that is state-funded (as in the UK) or health insurance wholly or partially paid for by their employers (as in Europe and the US. Taxes may be higher than Singapore’s but the difference is not as large as for those on high incomes since the tax system is much more progressive and covers capital gains as well as investment and interest income and dividends, which the PAP Government fails to tax in a conspicuous example of unfairness. CPF is also capped at a monthly salary of $6,000 which is again regressive since employee CPF contributions should be treated as tax, at least partially.

If we exclude Employer CPF contributions MOM’s figures now look like this:

In nominal terms full time workers salaries increased by 54% between 2009 and 2019. This might look impressive but the Government plays another trick to flatter its record. MOM defines full time employment as those working more than 35 hours per week whereas in the UK it is defined as 30 hours.  By using 35 hours as the cutoff point this will make our median full time wage look better compared to other countries where part time is defined as 30 hours or less. The total median monthly wage (including both full time and part time workers and excluding Employer CPF) was only $3500 in 2019.

Another way that the PAP Government disguises the relatively low earnings of Singaporean workers is to fail to normalise wages by dividing them by hours worked. It is no secret that Singaporeans work some of the longest hours in the developed world on a par with South Korea. Singaporean wages should also be compared with global cities of the same size rather than countries. For example  in 2019 the UK national median wage was about $4500 per month but the wage in London was more than $5700 (converted into S$). According to the US Census Bureau the median income for male workers in 2019 was US$57,456 (roughly $6500 per month using an exchange rate of US$1=$1.35) and for female workers US$47,299 ($5,300 per month). In New York median income for a one-person household in 2020 is US$79,600 (nearly $9,000 per month).

However when incomes are normalised by dividing them by average hours worked the contrast becomes much starker. In the UK the average worker (both full and part time) worked 32 hours per week in 2017 and the average full time worker in the US about 33. In Singapore the average worker worked 43 hours. Putting median incomes for both full time and part time on a per hour worked basis, one gets a figure for Singapore of $19 whereas that for London is $41 and for New York is $61 or over 3 times what a Singapore worker gets. $19 per hour would seem like a princely sum to the many Singaporeans who, in the absence of a minimum wage get between $5-10 per hour. For instance the per hour wage of a McDonalds crew member is $7 per hour.

As I have frequently said in my blog the PAP Government only publishes statistics which show it in a good light and either hides embarrassing statistics such as the incidence of poverty or uses distorted or irrelevant comparisons (like comparing Singapore with large countries or poor Asian neighbours). It was caught out when a UBS survey of purchasing power for employees in major global cities in 2011 put Singapore on a level with Moscow or Kuala Lumpur and well below many other Asian cities like Taipei and Tokyo. After that the PAP Government put pressure on UBS (presumably loss of GIC, Temasek and MAS business) and Singapore was quietly dropped from the survey so that our Ministers could continue to pay themselves millions (in the case of the PM’s wife literally hundreds of millions) while earning plaudits globally for self-styled “inclusive” growth from leaders like Obama and Bloomberg and publications like The Economist who should know better .  But only a little time spent analysing the data reveals that there is nothing “inclusive” about the raw deal Singaporeans get in comparison with our leeders.

 

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