Introductory note

Every five years, the Statistical Department carries a major survey on the income and expenditure of the households. That survey is a critical foundation in the process to update the composition of the basket of goods and services used for the calculation of the Consumer Price Index. But beyond that purpose, those surveys provide a wealth of information that deserves more attention than is usually the case.  It is not in the scope of this space to make a comprehensive analysis of the data. But even at a very high level of generality, a few questions and features resulting from the 2003 and 2008 survey are worth pointing out.

Household income and consumption

Table 1 highlights the somewhat dramatic changes in income, disposable income and consumption that took place in just five years. First, the growth in average income is striking for such a short period: about 65% for income and over 40% for disposable income. Secondly, as is implicit in the previous figures, there was a significant increase in the tax burden. Surely, the calculation of disposable income includes both direct taxes and net transfers. But as the latter are the minor and decreasing part in income, taxes must therefore explain the difference between income and disposable income, which jumps from 3.7% to 17%. Thirdly, the figures show a noticeable decline in savings, as consumption rises from about 75% of the disposable income in 2003 to more than 90% in 2008.

The same kind of comments could be made about Table 2, where the same variables are calculated per capita. Given that the number of members per household was very similar in both periods, the patterns observed per capita are very similar to those observed per household. Nonetheless, it is worth underlining that consumption per capita increased by 76% in the period, which signifies and yearly average growth in consumption of more than 11%.

When analyzed by deciles, the figures suggest a reduction in income asymmetries. In fact, the ratio between the top and bottom deciles decreases from 20 to just slightly over 13. At each income group, the increase in the median income is significant, varying from 40 to 100%. The bigger increases appear to have taken place in the lowest income levels, with the exception of the lowest deciles that are, comparatively, the abandoned group in the growth process.

Income sources

When we look into the sources of income, we detect some interesting features. In absolute terms the biggest increase is in employment related income, which means mainly wages (Table 1). Their contribution to the average household income rises to almost 80% from just below 70%. As property-related income also increases, the weight of transfers on the average household income decreases both in absolute terms (3354 to 2511 patacas) and relative terms (22% to 8%). This is a natural and expected evolution as the average income rises, especially if it is accompanied, as appears to be the case, by a less asymmetric distribution of income.

Table 2 shows the structure of income sources by quintiles. We can see again that the inter group ratios are lower in 2008 than 2003. An exception must be made to the property-related income that, without much surprise, sees that ratio increase a little. Note a few additional features. First, in all classes, just the employment-related income is bigger in 2008 than all the income in 2003. The new prosperity is strongly driven by rising salaries. Secondly, net income transfers increase for the two lower quintiles and decrease in the others. The decrease is particularly significant in the top quintile. Thirdly, property-related income increases significantly, in relative terms, across all groups.

The last table, shows in a very simple way, the relative growth in the income components, taking 2003 as the base year. It sums up much of what is implicit in the previous ones. Income growth is driven by wages and property revenues, which rise by 87% and 112%, respectively. Transfers decrease by a quarter in the period.

by José I. Duarte
Economist /Macau Business
Senior Analyst Data source: DSEC Charts and graphics in our paper edition and MB online browseable