More workers experience significant pay cuts: DBS report
Middle-aged workers, low-income earners bear brunt of pay cuts amid economic fallout caused by Covid-19
Many workers have had to take severe pay cuts, with middle-aged and low-income workers bearing a heavy brunt of the economic fallout caused by the pandemic.
According to a DBS Bank report, the proportion of its customers who experienced a significant decline - more than 10 per cent - in their salaries rose sharply from 15 per cent in March this year to 26 per cent in May.
Among them, about a third saw their incomes fall by more than half.
At a media briefing yesterday, DBS Group Research senior economist Irvin Seah said: "The bottom line we want to highlight is that even though some jobs may have been saved by government policies, the hit on income is already deep and broad-based."
Instead of retrenchments, some employers have adopted a "softer" approach such as no-pay leave, mandatory annual leave and pay cuts to reduce manpower costs to pull through this crisis, the report noted.
The inaugural report from the new DBS NAV Financial Health Series was derived from macro-economic data and data insights from 1.2 million retail customers over the months of March, April, and May.
The sample pool is aged between 25 and 70, and they use DBS as their main salary crediting bank.
Mr Seah also called the pandemic a "high regressive event" that could potentially widen the income gap in Singapore.
The report noted that middle-aged workers are more vulnerable to income deterioration, with more than half of those aged between 35 and 44 seeing their salaries fall by more than 30 per cent.
Mr Seah explained that one reason could be because middle-aged workers have less support measures compared with older workers.
He added: "Middle-aged workers also face competition from their younger peers, and their relatively higher wages also make them susceptible to wage cuts."
For lower-income earners - those who earn a monthly salary of $2,999 and below - about half saw their incomes decline by more than 50 per cent.
The concern over income deterioration is made even more compelling given that the report also revealed most of the affected workers do not have adequate emergency savings to tide them over.
In May, 64 per cent of individuals who experienced a significant fall in income had fewer than three months of emergency funds, with a sizeable 42 per cent of this group having less than a month of emergency funds set aside.
DBS consumer banking group head Jeremy Soo said, generally, most Singaporeans understand they need to save at least 10 per cent of their income.
He added: "But for many, they lack adequate emergency savings because their expenses - planned and unplanned - could have crept up over the years and are eating into what was once a sufficient amount of emergency savings."