Median income in Singapore projected to rise to $4,850 in 2022 & $5,000 in 2023: Can it keep up with inflation?

According to the latest data from the Ministry of Manpower (MOM) Singapore, the median gross monthly income from work plus Central Provident Fund (CPF) contributions went up by 3.2 per cent to $4,680 in from 2020 to 2021.

FYI: MOM reports this income data at the mid-year mark. This is why we have the salary numbers for 2021, even though the year has not ended.

But here’s the thing, the Government only publishes historical data and does not concern itself with future income projections.

If you want to gaze into the crystal ball, you can look at this 2021 Salary Increase and Turnover Study (via VulcanPost) published by British American Multi-National Company Aon.

The company provides financial risk-mitigation services like Commercial Risk Solutions, Reinsurance Solutions, Retirement Solutions, Health Solutions and Data and Analytic Services like salary and turnover data.

According to the Aon study, the median salary for workers in Singapore is projected to rise by 3.6 per cent, from $4,680 to $4,850 in 2022.

If this upwards trend persists, AON projects that the median gross monthly income from work might rise to about $5,000 in 2023.

But, you might be wondering. Can this increase keep up with inflation in Singapore?

What if your pay is not increasing at this rate?

We’ll answer these questions and more below.

TL;DR: Singapore median income projected to rise to $4,850 in 2022 & $5,000 in 2023: Can it keep pace with inflation?

Source: Gross Monthly Income From Work — Comprehensive Labour Force Survey, Manpower Research & Statistics Department, MOM / *projection by Aon / Figures reported mid-year.

• MAS Core Inflation rose to 1.5 per cent on a year-on-year (y-o-y) basis in October, from 1.2 per cent in September.
• Consumer Price Index (CPI) — All Items Inflation (Overall Inflation) picked up to 3.2 per cent y-o-y in October, from 2.5 per cent in September.
• According to the Aon study, the median salaries for workers in Singapore are projected to rise by 3.6 per cent from $4,680 to $4,850 in 2022. This means that the median salary for Singapore workers will beat inflation.
• But, if your salary does not beat inflation, you are experiencing a pay cut. Find out how to negotiate for a raise below.

Singapore median income beating inflation

According to the latest data published in MOM’s Labour Force in Singapore Advance Release, the median income in Singapore is keeping up with inflation.

Median gross monthly income from work (including employer CPF contributions) of full-time employed residents:

Mid-Year	Levels (S$)
2011	3,249
2012	3,480
2013	3,705
2014	3,770
2015	3,949
2016	4,056
2017	4,232
2018	4,437
2019	4,563
2020	4,534
2021	4,680

Change in median gross monthly income from work (including employer CPF contributions) of full-time employed residents:

Annualised Change (per cent p.a.)			Cumulative Change (per cent)
Mid-Year	2011 - ​2021	2011 - 2016	2016 - 2021	2011 - 2021	2011 - 2016	2016 - 2021
Nominal	3.7​	4.5	2.9	44.​0	24.8	15.4
Real^	2.7*	3.1	​2.2*	30.0*	16.7	11.4*

Source: Gross Monthly Income From Work — Comprehensive Labour Force Survey, Manpower Research & Statistics Department, MOM

Notes:

• Data exclude full-time National Servicemen.
• Data are for mid-year.
• Residents refer to Singapore Citizens and Permanent Residents.
• Gross monthly income from work refers to income earned from employment.
  • 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 (i.e. total receipts less business expenses incurred) before deduction of income tax.
• As data are captured from a sample survey, y-o-y income changes are prone to fluctuations and should always be interpreted cautiously. Income growth studied over more extended periods (e.g. five or 10 years) smooths out these fluctuations and hence provides a more direct indication of income growth.
• ^Deflated by Consumer Price Index (CPI) for all items at 2019 prices (2019 = 100).
• *preliminary as the full-year CPI data for 2021 is not available yet.​

In fact, there has been a real increase in the median income of workers in Singapore for the past 10 years after taking inflation into account.

Singapore inflation rate 2021

The recent Consumer Price Developments Report in October 2021 published by the Monetary Authority of Singapore (MAS) places a spotlight on the rising cost of living in Singapore.

• MAS Core Inflation rose to 1.5 per cent on a y-o-y basis in October, from 1.2 per cent in September
  • The increase was due to higher services, gas and electricity costs, food inflation, and a smaller decline in the cost of retail & other goods.
• Consumer Price Index (CPI) — All Items Inflation (Overall Inflation) picked up to 3.2 per cent y-o-y in October, from 2.5 per cent in September.
  • The uptick reflected stronger private transport and accommodation inflation, in addition to higher core inflation.

According to MAS, CPI measures the cost of a fixed basket of goods and services commonly consumed by resident households.

Whereas MAS Core Inflation measures the same cost of this fixed basket of goods, minus private road transport and accommodation costs, as they do not affect the day-to-day outlay of most Singaporean households and are subject to short-term fluctuations.

MAS Core inflation hit its all-time high in nearly three years, while overall inflation reached an eight-year high in October 2021.

We have to go back to March 2019 where the core inflation rate was at 1.7 per cent to find a time when MAS Core Inflation was higher.

Also, in an interview with The Straits Times, MAS and the Ministry of Trade and Industry (MTI) Singapore stated that:

It’s great that the median income in Singapore is projected to increase in 2022 and, in turn, keep up with inflation.

But what if your salary is not increasing at the same rate and cannot keep up with the steady increase in inflation?

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Unfortunately, if you don’t get that pay increase in 2021 and Singapore’s inflation rate stays the same or worse, trend higher as MAS and MTI have projected, you are actually experiencing a pay cut.

I’m not saying that your company is paying you less. Instead, your purchasing power from your pay has decreased, which means you can buy fewer things with the same amount of money compared to a year ago.

I would liken it to running a race on a travellator that is going backwards.

Since your money cannot buy as many things compared to last year, you could use this as ammunition for the pitch to convince your boss to increase your salary.

Speaking of ammunition, here’s one more bullet point for your pitch.

Great resignation in Singapore? 1 in 4 Singapore workers surveyed by Indeed planning to quit their jobs

According to a recent survey done by the International jobs listing website Indeed, about one in four (24 per cent) Singapore workers surveyed responded that they intend to leave their current position in the first half of 2022.

In addition, about one in two (49 per cent) Singapore workers responded that they were doubtful that they would not leave their jobs in the next half a year.

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For context, this Indeed commissioned survey interviewed 1,002 Singapore workers aged 16-55 at the start of the month.

Granted, if this survey was done on Indeed, it could indicate that the sample is biased as those happy at their jobs would not be on a job search portal. Not to mention that those who stated a desire to leave might not leave in the end.

But, these figures present a case that the Great Resignation or Great Reshuffle happening in America and Europe might soon be arriving on Singapore’s shores in 2022 if it had not reached already.

If you are an employee staying loyal to your company while everyone is leaving, you will have more leverage in your pay negotiations due to the situation.

This is assuming your company is reasonable and values you as a worker.

How to negotiate a higher salary in Singapore

But before you go barging into your office and asking for a raise:

Do read our article about how to ask for a pay raise during the Covid-19 pandemic first.

This article includes an actionable plan that will help you get that raise.

READ ALSO: A Singaporean's guide: Sign-on bonus and starting salary of schemes in the Singapore Armed Forces (army, air force, navy)

This article was first published in Seedly.