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How real is your wage growth?
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How real is your wage growth?

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You may be feeling the pinch. Things are getting more expensive and the overall cost of living is up. But the bigger question is, has your salary kept up with increasing prices?

To answer that question, we need to look at real wages, that is, wage levels that take into account inflation. Too much jargon? Let us explain.

Inflation is the increase in the prices of goods and services over a period of time. For example, a McDonald’s Big Mac burger would cost you about $6 today but 10 years ago, you could buy more with that - perhaps a Big Mac and coke. This is because prices have increased over the years and you can buy less with the same dollar today than in the past. By taking into account inflation rates, real wage is a more accurate reflection of our purchasing power.

So what do the numbers say?

The chart below shows the growth in real wages over time of full-time employed residents. Real wages have risen both in the first and second halves of the last 10 years for the 20th and 50th percentiles.

Chart 1: Change in Gross Monthly Income from Work

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Source: MOM, Labour Force in Singapore 2015

1. Gross Monthly Income includes employer CPF contributions
2. Data is for full-time employed residents (excluding excludes full-time National Servicemen), from June 2006 – 2015.
3. Deflated by Consumer Price Index (CPI) for all items at 2014 prices. Figures in brackets are deflated by CPI less imputed rentals on owner-occupied accommodation at 2014 prices.

In summary, while it's certainly true that prices have generally risen over the years, wages have risen even more for the lower and middle-income groups. We can enjoy more goods and services today compared to a decade ago.


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