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Sunday, August 29, 2010 By

Joseph Stiglitz: Government helped Singapore boom

Jospeh Stiglitz, who won the Nobel Prize for Economics in 2001, attributes the success of Singapore and other East Asian economies to government intervention. In his book, Freefall, he writes:

Government has played an especially large role in the highly successful economies of East Asia. The increases in per capita incomes there during the past three to four decades have been historically unprecedented. In almost all of these countries, government took an active role in promoting development through market mechanisms. China has grown at an average of 9.7 per cent per year for more than thirty years and has succeeded in bringing hundreds of millions out of poverty. Japan's government-led growth spurt was earlier, but Singapore, Korea, Malaysia, and a host of other countries followed and adapted Japan's strategy and saw per capita incomes increase eightfold in a quarter century.

Of course, governments, like markets and humans, are fallible. But in East Asia, and elsewhere, the success far outweighed the failures.

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Friday, February 26, 2010 By

Singapore’s growing income gap shows in report

The growing income gap is evident in Key Household Income Trends 2009, a paper released by the Singapore Department of Statistics. The gap between average and median monthly household incomes has been widening since 2006. The median monthly household income in 2009 was S$4,850 (about $3,447) and the average S$6,826 (about $4,852), a difference of nearly S$2,000. There was a difference of more than S$2,000 in 2008, when the median was S$4,946 and the average S$7,086.

Singapore_median_average2

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Tuesday, February 23, 2010 By

Foreign workers boosted economy and wages: Tharman

Foreign workers not only helped the Singapore economy to grow but also helped raise the median income of Singaporeans, Finance Minister Tharman Shanmugaratnam said in his Budget speech yesterday.

That contradicts a Wall Street Journal report last month, which I quoted in an earlier post.

The minister and the Journal both agree the foreign workers helped the economy to grow.

But their presence was a damper on productivity and blue-collar wages, according to the Journal.

Foreign workers — over a million strong — make up about a third of the Singapore workforce.

The median monthly income of people working full-time rose 0.5% from 2,590 Singapore dollars in June 2008 to 2,600 Singapore dollars in June 2009, after soaring 11% in 2008 and 7.7% in 2007, the Ministry of Manpower reported on November 30, 2009.

But many Singaporeans are unhappy about the influx of foreign workers.

The minister said there was a need to "moderate the growth of the foreign workforce", using a "price mechanism", like for any other product in the market.

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Wednesday, December 2, 2009 By

60 per cent of Singapore households earn less than national average

Sixty per cent of the households earn less than the average household income in Singapore while the top 20 per cent can save twice as much as they spend.

That's clear from the government statistics department's latest household expenditure survey covering 2007-2008. This chart from the survey shows the average monthly household income of all the income groups.

 Singapore_average_household
It says the average monthly household income was 7,440 Singapore dollars (about $5,390) in 2007-2008, up from 5,535 Singapore dollars in 2002-2003, when the last survey was done.

But look at the highlighted row outlined in red. That represents the 41st to 60th income quintile. And what's their average monthly household income? 5,480 Singapore dollars in 2007-2008, up from 4,193 Singapore dollars in 2002-2003.

That means the average monthly income of 60 per cent of the households was 5,480 Singapore dollars — nearly 2,000 Singapore dollars less than the national average household income.

Boosting the average household income are the high earners. The top 20 per cent's average household income of 18,472 Singapore dollars is more than six times as much as the bottom 20 per cent's — and more than three times as 60 per cent of the households'.

The income gap has grown slightly since 2002-2003 when the average household income was 5,535 Singapore dollars but 60 percent of the households earned on average 4,193 Singapore dollars — 1,300 Singapore dollars less.

One reason for the growing gap:

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Saturday, September 19, 2009 By

In millionaire-rich Singapore, majority income below national average

Nowhere in the world are you more likely to run into a millionaire than in Singapore. But the great majority of households in the city-state earn less than Singapore's average household income.

How can the majority earn less than the average? Is it because some are very rich?

Singapore had the highest concentration of millionaires last year, with 8.5 percent of the country’s households owning more than $1 million, reports the Boston Consulting Group. Switzerland was second, with 6.6 percent, followed by Kuwait, 5.1 percent, United Arab Emirates, 4.5 percent, and the United States, 3.5 percent.

With such a profusion of millionaires, of course, Singapore is rich, very rich.

Last year, the average monthly household income was 7,090 Singapore dollars (about $5010) for resident households and 7,750 Singapore dollars for employed households, according to a paper published by the Singapore Department of Statistics. Resident households denote Singaporeans and permanent residents and employed households are those where at one least one member is employed. 

Incomes were increasing, said the same paper, pointing out:

"In 2007, 33 percent of employed households earned a monthly income of at least 7,000 Singapore dollars. In 2008, 39 percent of employed households earned a monthly income of at least 7,000 Singapore dollars."

But that means 61 percent – or the great majority – earned less than the average household income.

Indeed, the median income – the income of half the households – was considerably less.

The median monthly household income, according to the same paper, was 4,950 Singapore dollars for resident households and 5,480 Singapore dollars for employed households.

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Wednesday, November 19, 2008 By

Housing story shows Singapore downgrading

Singapore is getting poorer. There can be no doubt about that after newspaper reports today that the Housing and Development Board (HDB) is building more two-room and three-room flats. The same Housing Board that once stopped building anything smaller than four-room flats.

"The government is building smaller flats to help more low-income families own homes and those home owners who need to downgrade because of financial difficulties," says the Straits Times, quoting National Development Minister Mah Bow Tan. "However, he did not say how many more of these flats were to be built. Instead, he stressed these flats were to meet a 'niche demand' and that the bulk of HDB homes being built will be three- and four-roomers," it added.

It's revealing that the bulk of the new flats under construction are three- and four-room units — and not five-room apartments and maisonettes that used to be so popular.

Official figures show average incomes have been rising every year since 1997. According to a Ministry of Manpower report, average monthly earnings have risen from 2,480 Singapore dollars in 1997 to 3,773 Singapore dollars ($2,478) last year.

Public housing figures tell another story. As the Straits Times reports:

The Housing Board stopped building two- and three-roomers in the 1980s.

But in 2004, three-roomers were re-introduced. Two years later, the HDB said it would resume building two-roomers to meet increasing demand and, since then, it has put on sale 539 of them.  The growing popularity of these smaller flats is a turnaround from the mid-1990s when the overwhelming demand was for bigger four- and five-room flats, with few takers for the two- and three-roomers.

However, since 1997, following the Asian financial crisis, more and more people have clamoured for them as they were forced to downgrade.

Why, if incomes are rising, is there a growing demand for smaller homes?

Because those are nominal earnings and not real incomes, as the ministry makes it clear.

And, besides, there a growing income gap in Singapore.

There were 77,000 millionaires in Singapore last year, up 15 percent since a year ago, the Straits Times reported in June.

But the income gap widened at the same time. According to the official Statistics Singapore:

"The Gini coefficient, which is a summary measure of income inequality, increased from 0.472 in 2006 to 0.485 in 2007."

The gulf between the rich and the poor is wider in Singapore than in Britain and America, which have Gini coefficients of 0.343 and 0.45 respectively. Lower still is the income gap in Continental Europe. The UN Habitat report released last month says the Gini coefficient is:

  • Lowest in the world — below 0.25 — in Denmark, Finland, the Netherlands, and Slovenia
  • Low — between 0.25 and 0.3 — in Austria, Belgium,France, Germany, Luxemburg, Norway, Sweden, and Switzerland
  • "Relatively high by European standards" — between 0.32 and 0.33 — in Greece, Ireland and Italy, Portugal (0.363), Britain (0.343), and Spain (0.34).

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Thursday, February 14, 2008 By

Singapore’s average income puzzle

"Singaporeans’ household incomes in 2007 highest in a decade but income gap between high and low income groups widens," reports The Straits Times. It adds:

Data published on Wednesday by the Department of Statistics showed that the average household income from work rose to $6,280*, from $5,730 the previous year.

But it doesn’t say the median household income from work was less: $4,870 or more a month for the employed households.

(Please note all figures in Singapore dollars. One US dollar is worth about 1.5 Singapore dollars.)

Actually, the per capita income of 90 percent of the households is less than the average monthly household income, going by the department’s own report.

That’s not mentioned by The Straits Times or Channel NewsAsia, which also reports only the average monthly income.

But you will find the median household income in the Key Household Trends 2007 report which you can download from the Department of Statistics website.

The median income tends to be lower than the average income. In 2005, according to the department, average household income from work was $5,400 while median household income from work was $3,830.

The median income is considered by many statisticians to be a better indicator than the average income, says Wikipedia.

Why?

Because if nine people earn $1,000 each and another person earns $11,000, their average income will be $2,000!

Wikipedia explains the difference between average and median income, quoting the US Census Bureau:

Median income is the amount which divides the income distribution into two equal groups, half having income above that amount, and half having income below that amount. Mean income (average) is the amount obtained by dividing the total aggregate income of a group by the number of units in that group.

Look at the Department of Statistics’ report and you will see the average household income was pushed up by the high-income group.

The per capita household monthly income from work for the top 10 percent of the employed households is $7,940 and for the next 10 percent, $3,460. In other words, the per capita income of 90 percent of the households is less than Singapore’s average household income.

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