Work incomes from less well-off families grew but at slower pace

But growth at slower pace than those of better-off households, resulting in growing income gap

Incomes from work of less well-off families here grew last year - but at a slower pace than those of better-off households.

The Gini coefficient rose to 0.459 from 0.458 in 2016, which was the lowest level in a decade.

But it stayed the same after taking into account government transfers and taxes. The Gini coefficient measures income inequality from zero to one, with zero being most equal.

A Department of Statistics report released yesterday showed the bottom half of households saw growth in real income - which takes inflation into account - rising between 2.1 per cent and 3.6 per cent for each household member.

For the next 40 per cent, the increase ranged between 3.7 per cent and 4.5 per cent.

The slower income growth among the less well-off last year reverses a five-year trend.

Between 2012 and last year, the real income for each household member went up between 4.2 per cent and 4.6 per cent a year, faster than the rise of between 2.2 per cent and 4.2 per cent among the better-off.

As for overall median household income - the midpoint in a range - the latest report showed it rose by 2 per cent in nominal terms, from $8,846 in 2016 to $9,023 a month last year.

After accounting for inflation, the rise is 1.5 per cent.

Experts said Singapore needs to keep an eye on the income gap to ensure social mobility and prevent social stratification.

The danger of growing income inequality was highlighted by Prime Minister Lee Hsien Loong in a parliamentary reply this week. If left unchecked, it would lead to "a rigid and stratified social system" that would cause Singapore's society to fracture, he said.

SIM Global Education senior lecturer Tan Khay Boon said the best long-term solution to managing the income gap is skills training and education.

He also said "social mobility is more important and effective over the long term to assist low income groups to move into the middle income".

Maybank Kim Eng economist Chua Hak Bin said the wider income gap reflects changes in the job market.

Professionals, managers, executives and technicians with higher skills are in greater demand and earning more in today's digital economy.

Disruption such as e-commerce in the retail sector has reduced demand and wages for blue-collar workers, he added.

Government transfers help narrow the gap. Last year, on average, resident households - including those with no working person - got $4,433 for each family member from schemes. Families in one- and two-room flats were given $10,245 for each member on average, more than double the transfers received by households in bigger homes.