Oral Answer by Mr Lim Swee Say, Minister for Manpower to Parliamentary Question on income gap

NOTICE PAPER NO. 317 OF 2016 FOR THE SITTING ON OR AFTER 16 AUGUST 2016

QUESTION NO. 553 FOR ORAL ANSWER

MP: Mr Saktiandi Supaat

To ask the Minister for Manpower (a) how has the income gap been trending over the past five years; (b) what are longer-term strategic plans to narrow the income gap in a sustainable manner; and (c) how many people are in the bottom 20th percentile of household income over the past five years.

Answer

1. The number of people in the bottom 20th percentiles of household income over the past five years has remained stable, alongside natural changes in total number of working households and household size.
2. Over the last five years, the Gini coefficient¹ remained relatively stable, at 0.472 in 2010 and 0.463 in 2015. Over the same period, the average household income from work per household member for the 1st and 2nd decile both grew by around 24% in real terms. This is the highest among all deciles.
3. The Government has also introduced transfers to help lower-income Singaporeans. This is reflected in the lower Gini coefficient of 0.41 in 2015 after Government taxes and transfers.
4. Nevertheless, a job is still the best welfare, and full employment is still the best protection for our workers. Our efforts to narrow the income gap in a sustainable manner must first and foremost be based on encouraging work, levelling up skills, productivity and wages of low-wage workers.
5. This is the reason behind the implementation of Workfare Income Supplement and Training Support for all lower-wage workers, and the use of policy levers to implement the Progressive Wage Model in the cleaning, security and landscaping sectors. These are our core measures to help low-wage workers to learn new skills, take on better jobs with higher productivity, and secure fairer and better wages in an inclusive, progressive and sustainable way.
6. These measures are bearing fruit. The gap between real income growth of full-time employed Singapore citizens at the 20th percentile and median has narrowed in the past five years as compared to the previous five years, from 2.1 per cent vs. 2.9 per cent to 2.9 per cent vs. 3.0 per cent.
7. There is however still much to be done. We will continue to strengthen our support framework for low-wage workers. For example, the Progressive Wage Model is today a ladder of minimum wage points. We are working to transform it to become a ladder of wage ranges so as to provide more scope for wage growth for our low-wage workers. This will help prevent wage stagnation at the various wage points, a common challenge faced by other countries with minimum wage policies.