In the two years leading up to 2022, inflation reached 8.6 per cent in Singapore, sparking anxiety among the public . Low-income households and older persons have been among the hardest hit by inflation and slow income growth . This raises two questions: Have wages been adequate to safeguard households' basic standard of living? Equally important, have public schemes helped to alleviate the burden of inflation, especially on vulnerable communities?
The basic standard of living
To assess living standards amidst inflation, it is imperative to establish a benchmark of how much income households need for a basic standard of living in Singapore. In 2019, the Minimum Income Standard (MIS) research team, led by
Dr Ng Kok Hoe of the Social Inclusion Project, conducted the first study on the cost of a basic standard of living in Singapore using the MIS method, focusing on older persons. We found out how ordinary Singaporeans think about what constitutes basic needs in Singapore today, and then determined the household budgets necessary to meet these needs. A follow-up study on working-age households was completed in 2021. In our recent
2023 report, we updated the MIS budgets for three indicative household types by adjusting for inflation between 2020 and 2022:
Changes in monthly MIS budgets for key household types
| Household type | 2022 | 2020 | Change |
| Single parent with one child 2–6 years old | $3,369 | $3,218 | +4.7% |
| Partnered parents with two children 7–12 and 13–18 years old | $6,693 | $6,426 | +4.2% |
| Single person, 65 years and older | $1,492 | $1,421 | +5.0% |
Note: The process of revising MIS budgets in line with price inflation is known as uprating. For details about the uprating process, please read our full report.Enduring wage inequality
While income growth between 2020 and 2022 has narrowed the gap between wages and income needs for some groups of workers, the overall picture of significant wage inequality across the workforce and low wages at the bottom of the distribution remains largely unchanged.
Wage inequality in Singapore is evident across occupations, types of work and educational levels. For example, the median work income of cleaners, labourers and related workers increased to 52 per cent of the MIS budgets, up from 48 per cent in 2020. Service and sales workers also saw a rise in their median work income, now at 80 per cent of the MIS budgets. Nevertheless, these gains still leave a considerable gap to meeting basic needs. Casual workers continue to face challenges, with their earnings falling 38 per cent short of the MIS budgets, despite a 19 per cent increase in median income. Educational level also plays a crucial role, as workers below secondary education are still about one-third short of the MIS budgets. Meanwhile, work income for the highest paid occupation —managers and administrators — is about three times the MIS budgets.
We assessed the adequacy of the current policy approach to wage protection. Including the increments since 2020, the two main wage interventions — Progressive Wage Model (PWM) and Workfare Income Supplement (WIS) — allow single elderly persons to achieve the MIS budget, as they did in 2020. But working-age households fall short, reaching less than 70 per cent of their income needs.
Persistent challenges in public schemes
The significance of public schemes in buffering the impact of inflation on households cannot be overstated. However, public provision in Singapore has not kept pace with income needs. While the MIS budgets (which indicate living costs) increased, the income limits and amounts of support under the major transfers and subsidies for children's care and education remained unchanged between 2020 and 2022. This has made it harder for households to qualify for support and has reduced the real value of assistance.
The Central Provident Fund (CPF) has seen small increments in the Basic Retirement Sum (BRS) and Full Retirement Sum (FRS), but these have not made a significant difference in retirement income adequacy. Payments based on the BRS cover only around 55 per cent of a single elderly household's MIS budget, while FRS payments are roughly equivalent to basic needs. In practice, achieving these amounts has been challenging, as only 65 per cent of active CPF members who turned 55 years old in 2021 met the targets.
Inflation, in its indiscriminate reach, can lead to a disproportionate burden on low-income families. For older people with low incomes, the inadequacy of ComCare Long-Term Assistance remains concerning. It pays only 43 per cent of what a single elderly person requires for basic needs and reaches just 0.6 per cent of the elderly population. The Silver Support Scheme — not updated during this period — provides 10 to 20 per cent of the MIS budget, albeit to more recipients. The GST Voucher – Cash, which targets lower-income households, is equivalent to just 1 per cent of the MIS budgets for working-age households and 2 per cent for single elderly individuals.
The 2023 national budget brought a glimmer of hope with a slew of one-off measures to lessen the impact of inflation and the GST rate hike. However, our findings suggest that the total amounts provided will add up to below 5 per cent of households’ income needs. They do not significantly alter the outlook for income security and access to a basic standard of living.
Policy lessons
These findings suggest important policy lessons. First, ensuring adequate wages is paramount to alleviating the burden of rising inflation and to meeting basic needs. There is a strong case to consider a living wage, a universal wage floor that will enable a decent standard of living for all workers. Second, the retirement income regime, which is almost entirely driven by income from work participation and disadvantages people with disrupted careers, requires major reform to protect poorer people in old age. Finally, policy processes must change too, not just policy content. Assistance amounts should be pegged to current prices to keep up with actual needs. Policy performance must be assessed by comparison to accurate benchmarks. These reforms can improve the chances for everyone in Singapore to achieve respect, belonging, security and independence.
The MIS Singapore team consists of Dr Ng Kok Hoe, Assoc Prof Teo You Yenn, Wong Yee Lok, Dr Neo Yuwei, Dr Ad Maulod and Dr Stephanie Chok. Access the study website and full report here:
Minimum Income Standard 2023: Household budgets in a time of rising inflation.