“In-work poverty”: 34% of households?


What proportion of households are “in-work poverty”?

I refer to the article “Household incomes rise in 2017, but at slower pace for bottom 50%” (Straits Times, Feb 8).

It states that “From 2012 to 2017, median monthly household income from work rose by 15.5 per cent cumulatively in real terms, or 2.9 per cent a year.”

As we have consistently refused to have a “poverty line” indicator – I understand that other countries’ have a “poverty” indicator called  “in-work poverty” which “is defined as individuals living in households where the household income is below the poverty threshold despite one member of the household working either full or part-time. The poverty threshold is defined as under 60% of the average household income (before housing costs). This group contains non-working household members such as children and non-working partners”.

According to the Department of Statistics Household Income Trends 2017 Report – the Average Monthly Household Income from Work Among Resident Employed Households in 2017, was $12,027.

Using the “under 60% of the average household income (before housing costs)” definition – the figure is $7,216 ($12,027 x 60%).

Looking at Table 8 (page 31) in the report – this is about 34 per cent of employed households, with income below $7,000.

Is this relatively low or high, compared to other developed countries?

In recent years – the analysis in the Household Income Trends Reports were based on “including employer CPF contribution”, instead of “excluding employer CPF contribution” in the past.

So, if we make an adjustment for the employer and employee CPF contributions – the net disposable household income may be $4,786 ($7,000 less 37 per cent CPF contributions).

Leong Sze Hian

About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.