Income (& Wealth) Inequality in Singapore: Trends & Statistics (2023)

Despite being a small country, Singapore is fortunate to have achieved great economic progress throughout the years. In general, most Singaporeans have higher incomes and greater wealth now than ever before.

But, does that mean that everyone has benefitted from the country’s success?

In most developed countries, including Singapore, the gap between the rich and the poor is prevalent. 

Are the rich getting richer? The poor getting poorer?

In today’s article, we’ll look at some statistics that show the degree of income (and wealth) inequality in Singapore.

So, read on! 

What Is Income Inequality?

According to Investopedia, income inequality is how income is unevenly distributed across a population.

When the distribution of income is less equal, there’s a higher level of income inequality, and vice versa. 

By further splitting the population, we’re able to identify the levels of inequality by various segments such as gender and race. 

Common methods to measure income inequality include the Gini coefficient and observing household incomes.

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What’s the Difference Between Income Inequality and Wealth Inequality?

While income and wealth may seem similar, they’re different. 

Income usually refers to the money earned through employment or having a business, while the wealth of an individual (or net worth) is total assets minus total liabilities. 

A high-income earning individual may not have a high net worth. In fact, one in two high-income earners are worried that they don’t have enough savings. And many find their incomes insufficient to cover their monthly expenses and thus have to rely on their savings to pay the bills, resulting in less assets (and wealth) being created. 

On the other hand, if a lower-income individual is able to practice good spending habits and save/invest, they could build wealth at a faster rate than some of these higher-income earners. 

But of course, if high-income earners are able to practice good financial hygiene, they’re able to build wealth at an accelerated rate. 

Unfortunately, for those who are in the lowest income group, they might not have anything left to be saved after spending on necessities.

What Causes Income Inequality in Singapore?

There’s limited information on the concluding causes of income inequality in Singapore, as it’s a complicated subject and there are many factors involved. 

Of course, there are theories. 

One such theory is that of technological advances. High-skilled and educated workers become in demand and are paid a premium, whereas low-skilled workers may find their incomes stagnating, thus widening the income gap. 

That being said, more has been done by the government to reduce income inequality, which has been made a national priority. More on that later.

5 Income (& Wealth) Inequality Statistics in Singapore

Let’s look at some statistics.

1) There are 298,650 millionaires in Singapore, but 790,000 adults have less than $13,500 in wealth

As mentioned earlier, income and wealth are different. 

How wealthy are the people living in Singapore? 

Credit Suisse releases an annual report on the household wealth of 5.2 billion people across the globe. We analysed these reports and discovered some interesting findings. 

While the average wealth per adult in Singapore is $483,575, it’s not a true representation of wealth of the majority of the population. The median wealth per adult, a better measure, is $125,729.

The report also stated that there are 298,650 millionaires, of which 73 have more than half a billion in wealth. 

However, at the other end of the spectrum, 16% of the adult resident population, or 790,000 people, have a net worth of less than $13,500, shining some light on the wealth inequality here. 

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2) Median gross monthly income increased by 45.7% from 2012 to 2022

The median gross monthly income (inclusive of employers’ CPF contributions) was $5,070 in 2022. This means that half of the population was earning below that amount, and the other half was earning above that. 

Median income has increased by 45.7% from 2012’s figure of $3,480. During this period, after factoring in inflation, the annualised growth rate was 2.6%. 

While it’s good to know that the median income has increased, it only reflects those in the “middle” of the population. 

We’ll need to take a look at the bottom and the top income earners. 

3) The difference in average monthly household income per member between the top 10% and bottom 10% is $13,665

The Singapore Department of Statistics produces annual data on household income. 

Here are data on the average monthly household income per member (inclusive of employer CPF contributions) of the bottom 10% and top 10%: 

The difference in average income was $9,288 in 2010, but was $13,665 in 2022, which is currently the highest figure during this period. This could reflect a widening income gap.

However, it must be noted that these figures don’t include government transfers, which are primarily meant to help lower-income families. We’ll touch more on that later. 

Next, we should also look at the rate of increase of household income per member. 

From the previous table, the average household income per member of the bottom 10% increased by 80.8% from $381 in 2010 to $689 in 2022. During the same period, household income per member of the top 10% grew by 41.3% from $9,669 to $13,665. This could signify that low-income households are increasing their income at a faster rate than those at the top. 

When we factor in inflation, here are some data on the real change in average monthly household income per household member: 

Looking at the numbers, 2020 was a tough year for everyone as all income groups suffered a drop in household income. 

The bottom 10% suffered the most with the steepest drop of 6.1% in income. And because of that, more help has been given by the government.

2021 and 2022 were better years as household incomes recovered.

4) Lower-income families received the highest government transfers of $12,189 in 2022

To address the widening wage gap, Singapore utilises government transfers, which redistribute wealth towards the lower-income groups.

Examples of government transfers include CPF and MediSave top-ups, GST vouchers, and the many schemes available to provide financial aid.

These government transfers are funded by government revenue, of which the bulk comes from corporate and personal income tax and goods and services tax (GST). 

A greater percentage of such taxes (including others) tends to come from richer people as they earn a higher income, own cars, have multiple properties, etc. 

Here are the average annual government transfers (per household member) given over the years: 

An average of $13,824 in government transfers, the highest in any given year, was given to each member living in HDB one- and two-room flats in 2020. This was because of the COVID-19. In 2022, $12,189 in government transfers were provided to those groups.

You can also see that the numbers of government transfers are much lower in other types of dwelling.

With all this aid, income inequality has been reduced, as seen from the Gini coefficient.

5) The Gini coefficient was 0.378 in 2022, the second lowest in a decade 

Another way to measure income equality is the Gini coefficient. While there are many ways to compute this figure, Singapore mainly uses household income. 

A coefficient of 0 means that there’s total income equality, whereas a coefficient of 1 reflects total income inequality. 

Here are the Gini coefficient data on household income (per household member) in Singapore over the past decade: 

Note: the data includes employers’ CPF contributions

As you can see, even when we don’t account for government transfers, the Gini coefficient has been decreasing over the years. 

But government transfers do matter. 

With all the aid received in 2020, the Gini coefficient has reached 0.375, the lowest point in a decade. Even in 2022, the Gini coefficient of 0.378 wasn’t far off from 2020’s figure.

Wrapping Up 

High levels of income inequality can create social unrest. Thus, the government has made reducing income inequality its priority. 

One way to do this is to provide government transfers to redirect wealth to lower-income families. 

And the data have shown that income inequality has been reduced over the past years.

In my opinion, while it’s good that government aid is provided, one should always try to be in control of and improve their own finances, whenever possible. 

Making efforts to build a career and having good financial literacy can push up your personal finances in the long run. As such, consider going through a comprehensive financial planning session.