Singapore, known for its wealth and efficiency, hides a more complex reality. Despite its impressive economy and skyline, many face stagnant wages, a vulnerable migrant workforce, and a high cost of living, highlighting growing socio-economic divides.
Stagnant wage growth for average households, the precarious existence of a vast migrant workforce, and a relentlessly high cost of living paint a portrait of deepening socio-economic divides.
The Lion City's Two Tales: Wealth Measured vs. Wealth Felt
Singapore boasts impressive national economic figures, with a GDP per capita estimated at US$92,000 to US$93,000 in 2025. When adjusted for purchasing power parity (PPP), this rises to around US$153,000 to US$156,000, ranking second globally. However, the wealth measured by GDP doesn't always reflect the financial reality for most households.
Despite a high nominal median household income of S$11,297 in 2024, real income growth has slowed to just 1.4%, down from 2.8% in 2023. Over five years, real median income grew by only 0.7% per year, indicating that households' purchasing power is not keeping up with the overall national wealth.
The disparity between high GDP per capita and stagnant median income growth suggests a disconnect between national economic indicators and individual financial progress. GDP includes corporate profits and foreign investment returns, which do not directly benefit average households, exacerbating this gap.
Income inequality remains a concern, with Singapore's Gini coefficient standing at 0.435 in 2024 before government transfers. However, after accounting for these transfers, the Gini coefficient drops significantly to 0.364, marking the lowest level since records began. This reduction highlights the impact of government support in managing inequality.
From 2019 to 2024, while the bottom nine income deciles saw modest growth in household income, the top decile experienced a decline. The top decile’s average income was $15,605 per member in 2024, significantly higher than the $748 for the lowest, suggesting a more nuanced inequality story over this period.
Singapore's Reliance on Migrant Workers
Singapore’s economy heavily relies on foreign workers, with approximately 1.576 million migrants, including 1.166 million Work Permit holders. A large portion of these workers, about 456,800, are employed in construction, marine, and process sectors, primarily from South Asia and China.
Migrant Domestic Workers (MDWs) also form a significant part of the workforce, representing about 38% of the total pre-pandemic labor force.
Many foreign workers earn wages far below the median resident salary, often under S$2,400 per month. NGOs like Transient Workers Count Too (TWC2) report cases where wages can be as low as S$1.50 per hour.
Despite the government’s claim that wages are market-driven, critics argue that high levies on employers and excessive recruitment fees undermine workers’ earning potential.
This wage structure, combined with the constant threat of repatriation, creates a "managed dependency" where workers remain vulnerable and unable to negotiate better terms. Policies that maintain precarious conditions benefit employers but raise significant ethical concerns about workers' social and economic exploitation.
Living conditions for foreign workers in dormitories, especially CMP workers, remain a significant issue, with overcrowding, poor sanitation, and pest infestations common.
Although the government has introduced standards to improve conditions, challenges such as dirty common areas, bad food, and inadequate transport persist, and the upgrade timeline for existing dormitories could extend until 2040.
The Progressive Wage Model (PWM) aims to increase local low wages, but without adjustments to foreign worker quotas or levies, employers may hire more migrant labor to keep costs down. This could undermine the PWM's effectiveness and perpetuate the reliance on cheap foreign labor, reflecting broader societal and ethical issues.
The Middle-Class Squeeze: High Costs Erode Singaporean Gains
Singapore’s residents, particularly the middle class, face significant pressure from the high cost of living, despite nominal wage gains. Inflation surged post-pandemic, reaching 6.12% in 2022 and 4.82% in 2023. Although inflation moderated to 0.9% in early 2025, persistent price pressures continue to strain household budgets.
Food costs, accounting for 20.4% of the Consumer Price Index (CPI), saw a 1.3% rise in March 2025. Housing and utilities, the largest expenditure group at 29.4% of the CPI, continue to rise, along with transport and healthcare, contributing significantly to household expenses. These increases erode purchasing power despite nominal wage growth.
The inflation burden disproportionately impacts lower-income households, with the CPI rising 2.7% for the lowest 20% income group, compared to 2.1% for the wealthiest. This is due to lower-income households spending more on necessities like food and utilities, which have seen sharp price hikes, deepening inequality.
Housing affordability remains a major challenge, with resale market prices and private property costs out of reach for many. Even subsidized Housing Development Board (HDB) flats have high monthly rents, averaging between S$3,000 and S$4,500 for three-bedroom flats, limiting wealth accumulation and social mobility for younger and lower-income generations.
The combination of modest real wage growth and high living costs creates a "squeeze," especially for middle and lower-middle-income families. A recent YouGov survey revealed that 72% of Singaporeans consider the cost of living their top concern, with housing affordability and healthcare also major issues, suggesting growing dissatisfaction with government policies on affordability.
Policy Efforts, Public Unease, and an Uncertain Future
The Singapore government has implemented several policies to reduce inequality, such as the Progressive Wage Model (PWM) and Workfare Income Supplement (WIS), which help boost wages and retirement savings for lower-income groups. These efforts have seen success, but challenges remain, including limited PWM coverage and the potential for foreign labor preference.
Despite government transfers, critics argue that policies like PWM and WIS do not address the root causes of inequality and may only provide temporary relief. There's ongoing debate on whether a universal minimum wage would be more effective, with opposition parties pushing for such reforms.
Public sentiment is shifting, with greater awareness of inequality and living cost pressures, leading to calls for a re-evaluation of Singapore's meritocratic model. This has prompted discussions of a "Meritocracy Plus Support" model that includes broader social support and inclusivity.
The rise of AI and automation presents new risks, particularly for low-wage workers and migrants, potentially exacerbating existing inequalities. Without targeted policies for upskilling and social safety nets, these technological shifts could widen socio-economic divides and undermine progress.
