Part of adulting is knowing that sensitive matters such as salaries are not topics for casual conversations.
For every Singaporean who wants to know how they are doing compared to everyone else, especially during a pandemic, we can refer to the median income information published by the Ministry of Manpower and Department of Statistics Singapore.
According to MOM’s Labour Force Report 2020, the median income (including employer CPF contribution) $4,534 in 2020. Once we exclude employer CPF contribution of 17% which is how we typically understand salary and income, the median income works out to be $3,763 in 2020.
Median Income Has Actually Fallen In 2020 But Has Increased Over The Years
Based on MOM’s data from the Comprehensive Labour Force Survey, the median income (including employer’s CPF) has been increasing every year since 2004.
2020 is the first year in more than a decade where median income has fallen by 0.6%, from $4,563 in 2019 to $4,534. After adjusting for inflation, real income growth declined by 0.4% in 2020, compared to the increase of 2.2% in 2019.
Source: MOM. The data point for 2005 is missing as the Comprehensive Labour Force Survey was not conducted that year due to the conduct of the Census and General Household Survey.
This decline in 2020 isn’t surprising with the economic fallout from the COVID-19 pandemic where resident unemployment rate hit a high of 4.1%. Overall, despite the slight dip in 2020, Singaporeans have been experiencing income growth over the years.
Median Income Does Not Reflect Your Take-Home Salary Or What You Can Afford
MOM’s definition of income refers to employment income, including employer’s CPF contribution. For employees, it refers to the gross monthly wages or salaries before deduction of employee CPF contributions and personal income tax. It comprises basic wages, overtime pay, commissions, tips, other allowances and one-twelfth of annual bonuses. For self-employed persons, gross monthly income refers to the average monthly profits from their business, trade or profession before deduction of income tax.
This means that the median take-home salary is much lower once you remove the CPF contributions (totalling about 37%). For 2020, the effective median take-home salary would be around $2,850.
Additionally, we would have to pay income tax. Based on the salary of $2,850, the annual income would be $34,200 which puts us at the second tax bracket with an effective tax of $347 before any deductions. This brings us to $33,853 annual income or about $2,821 a month, which is a far cry from the initial figure of $4,534.
Considering that our take-home salary is the effective salary we can spend with, this difference can greatly affect what we can afford.
Median Income Does Not Reflect Our Household Situation As Well As Household Income
How much salary we earn is also different from what we earn or need as a household.
For instance, a sole bread-winner with an income of $10,000 and 3 dependents would feel more financially stretched than a dual-income couple with no dependents, each earning $3,000.
According to the Key Household Trends 2020 report, median household income from work was $9,189 in 2020. However, that doesn’t account for the number of household members. Median household income from work per household member was $2,886 in 2020. Again, similar to median income, these figures include employer CPF contribution.
Once CPF contributions are removed from the figures, the median household income from work drops to $5,789 while the median household income from work per household member is $1,818.
This may be a more accurate depiction of households in Singapore where there is at least one dependent even for a dual-income household. How high or low our individual income may be not as critical as our overall household income and the number of dependents we have to support.
Median Income Does Not Reflect Whether We Are Overpaid Or Underpaid
The median income can give you a reference point as to how the 50th percentile of the population is doing: 50% of the population earns less than $4,534 while 50% earns more. However, it doesn’t tell us any information about whether we are overpaid or underpaid.
This is because wages are closely tied to the work we do and our job occupation. To know whether we are overpaid or underpaid for our job scope, we have to look at the wages paid for people working in similar job scopes.
While there are salary benchmarking guides and salary comparison sites available, MOM also publishes occupational wage data. For the curious, MOM has a salary comparison tool available on their website.
For example, if I was curious about how much a writer earns, I can look at MOM’s 2019 report on occupational wages. The relevant sector would be information and communications. Some of the relevant occupations include author and related writer, book editor, editor (radio, television and video), journalist.
However, do note that this report calculates wage differently from the median income mentioned above. The basic wage refers to the basic pay before deduction of employee CPF contributions and personal income tax. It excludes employer CPF contributions, bonuses, overtime payments, commissions, allowances (e.g. shift, food, housing and transport), other monetary payments and payments-in-kind. The gross wage refers to the sum of the basic wage, overtime payments, commissions, allowances, and other regular cash payments. It is before deduction of employee CPF contributions and personal income tax and excludes employer CPF contributions, bonuses, stock options, other lump sum payments and payments-in-kind
|Occupation||Median Basic Wage||Median Gross Wage|
|Author and related writer||$4,155||$4,163|
|Editor (radio, television and video)||$3,995||$4,063|
Armed with this information, I can make a better assessment of how I compare against others in the same occupation. However, this is not a basis to ask for a pay raise, as performance and experience (and some say, qualification) all pay an important role in how companies decide to pay.
DollarsAndSense.sg aims to provide interesting, bite-sized and relevant financial articles.
Learn together with like-minded Singaporeans at the Personal Finance Discussion SG Facebook Group by discussing a range of personal finance topics.
If you have not done so, subscribe to our free e-newsletter to receive exclusive content not available anywhere else.