2020 will forever be remembered as the year COVID-19 turned the global economy upside down and ravaged healthcare systems worldwide. More than one year on, uncertainties from the pandemic have not gone away. In fact, it is acknowledged that we are entering a new normal because of the pandemic – which means COVID-19 will never go away in many ways.
What we can do more than one year on is count the actual impact that COVID-19 has had. Already, we know COVID-19 has hit Singapore with the worst recession in history – with the Singapore economy contracting 5.4% in 2020.
Employees in Singapore have also been hard hit – with median income fall for the first time in 15 years. Low income, lower-educated and non-PMET employees were more severely hit.
In February 2021, Singapore’s Department of Statistics (DOS) also revealed the Key Household Income Trends, 2020 – diving into how COVID-19 has affected Singapore households. We summarise 5 important takeaways from the report, so you don’t have to read the whole thing but still want to be attuned to the statistics.
#1 Household Incomes Fell 2.5% In 2020
In 2020, the COVID-19 pandemic forced the median household income from work down 2.5% to $9,189 from $9,425 in 2019.
In real terms – or in terms of actual loss in spending power – the median household income fell by 2.4% in 2020.
However, the report also noted that in the past 5-year period, the median household income from work actually rose 5.2% cumulatively, or 1.0% annually in real terms.
Source (for all charts): Key Household Income Trends, 2020
#2 The Lowest Income Households In Singapore Saw A Real Decline of 6.1% (Far Worse Than Other Households)
The bottom 10% income group in Singapore were far more impacted by COVID-19 than the top 90%.
After adjusting for inflation, households in the top 90% recorded real income declines of 1.4% to 3.2%. In contrast, the bottom 10% of households saw the largest real income decline of 6.1%.
Again, the report also depicted the fact that all households in Singapore still managed to experience income growth over the last 5-year period.
What the chart also depicts is that the next lowest income households – in the 11th to 20th decile – was also the second-worst hit with real declines of 3.2%. the 20st to 30th and 31st to 40th deciles also saw declines of 2.0% or more.
#3 Each Person In 1- & 2-Room HDB Flats Received $13,670 In Government Transfer In 2020
While it was true that the lowest income households were the worst affected by COVID-19, the government intervened to provide $13,670 in government transfers to each household member (on average) living in 1- & 2-room HDB flats.
In fact, the report also stated that each resident household member in Singapore received $6,308 (on average) from various government schemes in 2020. This was much higher than the $4,648 (on average) that each household member received in government transfers in 2019.
Some of the government schemes that led to this included the existing Workfare Income Supplement (WIS) and GST Vouchers, as well as new schemes in 2020 such as the Care and Support Package, Self-Employers Persons Income Relief Scheme (SIRS), Temporary Relief Fund and COVID-19 Support Grant (CSG).
#4 Singapore’s Gini Coefficient Declines To Lowest Level
As a result of almost double the government transfers for household members living in smaller HDB flats, the Gini Coefficient – a measure of income inequality – declined to its lowest level in 2020.
Excluding government transfers, the Gini Coefficient would have been the same level as in 2019. This is despite the lowest income households being the worst affected.
One thing that caught our attention is that this only reflects household income from work. Richer households may derive a larger portion of their wealth and income from sources outside of work. One way this can be seen is in Singapore’s Report on the Household Expenditure Survey, which depicts that retiree households in condominiums and landed property receive the bulk of their income from rental income and investment income.
#5 The Richest Households In Singapore Also Receive Substantial Government Transfers
The Singapore government tends to disburse support based on the annual value of the residential property we are staying in.
Despite this, those living in condominiums and landed properties do receive substantial government transfers. This amounted to $3,741 and $3,800 respectively.
In a normal year (such as in 2019), landed property household members received almost 70% of what someone living in a 4-room HDB flat received on average. During 2020, this figure dropped to about 61%.
Singapore’s Economy To Remain Hard-Hit, But On Path To Recovery
Despite the relatively dull report from 2020, that was to be expected – COVID-19 not only impacted businesses and people’s livelihoods, but also health and lives.
The Ministry of Trade and Industry (MTI) forecasts Singapore’s 2020 GDP to expand by between 4.0% to 6.0%. While this is not exciting, based on a lower base as a starting point, it does indicate recovery and exiting COVID-19 impacts.
Similarly, Singapore’s Budget 2021 also estimates Singapore’s government revenue to come in at over $76.6 billion. This is higher than 2019’s actual revenue. In a rather simplistic manner, this shows that the Singapore government is forecasting that we should be in a better state than in 2019.
Many government schemes have also not been continued in 2021, while support has been targeted to industries that the government feel need to be supported to aid in Singapore remaining competitive in the long-term.
As individuals, we must ready ourselves not to rely on government support – as this is not going to come unless the COVID-19 pandemic takes a drastic turn for the worse. As households, we must also forge ahead and take up opportunities in the jobs market.
Cover image credit: Raymond Quek
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