In the past five years, household incomes rose across the board, but they did not do so evenly.
Households in Housing Board flats had higher income growth than those in condominiums and landed property. And although income from work went up, it now forms a smaller proportion of overall household income.
HDB household incomes grew 5.2 per cent a year on average, according to the Department of Statistics' Household Expenditure Survey, conducted every five years.
The latest survey is based on data from 2012 to last year.
In contrast, incomes rose 3.6 per cent a year for households in condos and other apartments, and 4.2 per cent for those in landed properties.
In absolute terms, the gap is still stark. The average monthly income was $7,900 for HDB households, while it was $20,536 for households in condos and $26,058 for those in landed properties.
But with incomes growing faster at the bottom, the income gap seems to have narrowed, noted SIM University economist Randolph Tan. The bottom fifth saw annual income growth of 6.6 per cent, compared with 4.7 per cent for the top fifth.
Overall, household income growth was driven by rises in work and non-work incomes.
Business income rose an average of 5.2 per cent a year, while employment income rose 3.9 per cent. Non-work income grew the fastest, at 22 per cent a year.
The differing growth rates meant that although employment income still forms the bulk of income, its share has fallen.[[{"fid":"29115","view_mode":"default","type":"media","attributes":{"height":267,"width":410,"border":"0","class":"media-element file-default"}}]] [[{"fid":"29117","view_mode":"default","type":"media","attributes":{"height":267,"width":410,"border":"0","class":"media-element file-default"}}]]
It accounts for 78.6 per cent of household income, down from 84 per cent five years ago.
Business income continued to account for 11 per cent of income.
But the share of non-work income doubled to 10.5 per cent, from 5 per cent five years ago.
It was especially significant for households in the bottom fifth.
Such households get an average of $536 in such income each month. This represents more than a quarter of their income, up from less than a fifth five years ago.
More than half of this is from sources such as relatives and friends, as well as Central Provident Fund payouts. Retiree households form a quarter of households in the bottom fifth.
But much non-work income also comes from the Government, for instance, in the form of GST Vouchers and Workfare Income Supplement scheme payouts.
For households in the bottom fifth, almost $1 out of every $10 in income comes from regular government transfers, noted Nanyang Technological University Assistant Professor Walter Theseira.
"So, a large part of their income increase is because of the increase in generosity of transfers."
But this is not a good strategy in the long run, he added. "The Government will need to look at policies that help them increase their job earnings."
Those at the top are also getting more income from non-work sources, with an average of $2,956 a month. But this is mainly rental and investment income.
Govt help boosts income, cuts costs for the poor
Help extended by the Government has boosted the income of low-income households and reduced the amount they have to spend, according to the Household Expenditure Survey released yesterday.
Households living in one- and two-room Housing Board flats receive an annual average of $10,067 per household member in government transfers, rebates and subsidies. This is close to their annual income per member before transfers, which is $10,145.
Similarly, households in the bottom fifth receive an annual average of $5,560 per household member in transfers, on top of their $6,183 pre-transfer income per household member.
This is the first time that the survey, done every five years, has looked at the effect of government transfers on household income and spending. The significant impact they have on poor households comes against the backdrop of increased efforts to address the widening income gap.
For instance, the Workfare Income Supplement scheme, introduced in 2007 to top up the pay of low-wage workers, was enhanced in 2010 and 2013 to cover more workers and give higher payouts.
But the bulk of government transfers is in the form of rebates and subsidies. These include subsidies for education and housing, as well as HDB rental rebates. One- and two-room HDB households receive $8,064 in rebates and subsidies annually per member.
For taxi driver Ng Thong Eng, 51, medical subsidies make a big difference. He and his 84-year- old father have ailments such as heart problems, and their medical bills are subsidised by 95 per cent. That, he said in Mandarin, is "a huge burden off my back".
His 44-year-old wife, who works as a part-time cleaner, also receives Workfare payouts.
Economist Randolph Tan, however, warned against relying too much on transfers. "The main concern is that one cannot hand out money from an empty kitty."
The Government should continue to give transfers, "but in a considered manner", he said.All income groups forking out more for finer things
Households in all income groups are spending more, driven by changing lifestyles and an appetite for the finer things in life.
Overall, household monthly expenditure rose by 4.4 per cent a year on average - from $3,809 to $4,724 - between 2008 and 2013.
This was higher than the annual increase of 2.6 per cent recorded over the previous five years.
The Department of Statistics gave this bird's eye view of spending levels and patterns in its latest Household Expenditure Survey, out yesterday.
The survey showed that housing, food and transport continue to make up the biggest share of household expenditure.
Households spent an average of $811 a month on transport, up from $700 previously.
The increase is due mainly to higher expenditure on flights and private transport. Public transport expenditure rose from $157 to $167 a month over the same period. Private transport expenses - mainly cars - rose to $574 a month, from $531 five years ago, mostly due to more spending on car maintenance and petrol.
People are dining out more often and at more upscale eateries. Households spent an average of $764 a month dining out, up from $592 five years ago and $466 a decade ago.
The proportion of spending on restaurants, cafes and pubs also rose to 35 per cent of food services, up from 22 per cent 10 years ago.
More households - 42.1 per cent - own a car now, up from the 38.3 per cent who did five years ago.
Middle-income households experienced the biggest increase in spending. The average monthly expenditure of this group rose by 5.5 per cent a year.
Sales manager David Koh, 49, felt that his family of four spends more today compared to five years ago. He and his civil servant wife, 40, together take home about $9,000 a month.
"When we stock up on groceries for the week at the supermarket, we can spend $200 now, when we used to spend $100."Efforts to narrow income gap bearing fruit but challenges remain
If there is one key takeaway from the latest Household Expenditure Survey, it is that the drive to help the lowest income group is bearing fruit.
The Government began to pay much more attention to the lower-income group almost 10 years ago, when the income gap started to grow wider, fuelled by globalisation, free movement of cheap labour and technological progress.
These forces rewarded high-skilled talent, but pushed down wages for low-wage workers even as they ravaged jobs in the middle for many countries, including Singapore.
The Government began its efforts to close the gap in earnest when it turned the Workfare Income Supplement into a permanent scheme in 2007.
Then, over the following years, it sharpened its redistributive policies, giving more to those at the bottom, and in a more targeted fashion. Examples of such efforts include the regular goods and services tax (GST) rebates, U-Save vouchers, and education and health subsidies.
Yesterday's national survey findings showed that such policies have had a positive impact on the group near the bottom.
Average monthly incomes for this group rose by 6.6 per cent a year over the past five years, much faster than the 5.3 per cent average rate for all groups.
Significantly, too, for the bottom 20 per cent, income grew just 4.5 per cent a year in the previous five-year period.
To be sure, the pace of growth means little especially if the incomes differ so much between the top and bottom earners.
Average monthly income for the top was $24,544, more than 12.13 times the $2,022 for the bottom 20 per cent.
But the gap between the top and bottom was even bigger - more than 13 times - the last time this survey was conducted.
So, it is fair to say that progress has been made.
Qualitatively, the expenditure figures also give hope that lives for those at the bottom are improving.
The survey showed that those at the bottom were spending on items such as mobile phones and pay-TV.
Five years ago, just under one in four of the bottom 20 per cent of households had pay-TV. Today, some 39.2 per cent of households are watching cable television.
Mobile phones, seen as essential in today's Internet era, also saw higher penetration among low-income households. Nearly nine in 10 now own at least one mobile phone, up from seven in 10.
The digital divide remains, but is narrowing.
The proportion of households in the bottom 20 per cent which have Internet subscription and access nearly doubled from 29.8 per cent to 49.5 per cent. But among the highest earning households, 95.2 per cent have such access.
Does this mean the battle against inequality will get easier?
No. The opposite is probably true: It will get harder from now on.
OCBC economist Selena Ling said: "With the large chunks of the puzzle already in place, such as Workfare, we will probably see a stabilisation of income growth at the bottom from now on."
The next step must be to see how the Government can continue to narrow the gap without draining the state's coffers.
To do that, it will have to continue to judiciously target its financial aid and subsidies. It will also have to start thinking about raising taxes - Robin Hood-style - to fund subsidies for those at the bottom.
The Government has said that it will not raise taxes this current term. However, we are just slightly beyond the mid-term, so some serious thinking on this front may be in order.
How the Government balances these different pressures, with an election looming in 2016, will be keenly watched - and felt.
This article was first published on Sep 19, 2014.
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