Singaporeans with low incomes continue to face the lowest wage growth, DBS says
According to a recent analysis by Singapore’s largest lender, low-income workers would have the slowest wage growth and the sharpest increase in household spending as inflation rises.
According to the survey, wages for people making less than $1,815 per month in Singapore barely increased by 2.5 percent between May of last year and this year.
That is less than the nation’s 5.2% first-half 2022 average consumer price index inflation.
Customers who were paid between S$5,000 and S$7,499, however, saw wage rises of 11.1 percent, and those who were paid S$10,000 and beyond, received raises of 13.6 percent within the same period.
According to Irvin Seah, senior economist at DBS Group Research, “customers earning below S$2,500 are typically elderly people who have a reduced earning power or workers who are in lower-skilled professions.”
Despite increases in pay and perks, the study of 1.2 million DBS retail customers revealed that over half of respondents’ income lagged behind inflation.
However, according to Seah, low-wage individuals receive financial assistance from the government, which gives them greater spare cash.
According to Seah, the overall income rise for the lower income category would be more encouraging at 19.2 percent year over year if the bank took into account customers’ upward income mobility, which refers to a person’s salary gradually rising throughout their life.
Along with slower salary growth, persons in the lower income bracket also have to deal with rising expenses that have increased more dramatically than those in the higher income bracket.
According to the survey, expenses for Singaporeans making less than S$2,500 increased by 13.8% between May 2021 and May of this year—5.6 times faster than their income growth of 2.5%.
For Singaporeans making between S$5,000 and S$7,499, expenses increased by 2.2 times more than income did, which increased by 11.1 percent. Unless there is a noticeable improvement in income growth or upward income mobility, such [a] tendency for the lower income is not sustainable, Seah added.
Household spending has increased as a result of rising inflation and the pandemic’s impact on the economy.
DBS reported that, up from 59 percent a year ago, its customers are now spending 64% of their income.
Since the Covid limitations were loosened, millennials (those between the ages of 26 and 41) have been spending more as the economy has recovered. Over the past year, expenses for millennials increased by approximately 30%.
Baby boomers (aged 58 to 76) experienced a lesser increase in spending.
Baby boomers are mostly retired, so “on an aggregate level, the income increase would logically be smaller,” Seah added.
Almost every spending category experienced double-digit growth.