Introduction
Standard of living (SOL) is assessed through both material and non-material aspects. Material SOL refers to an individual's ability to consume goods and services, while non-material SOL covers quality-of-life factors such as health, education and work-life balance. The three indicators provided, real GDP at 2015 prices, the unemployment rate and the inflation rate, offer some insight into changes in Singapore's standard of living in 2021. However, these statistics alone do not give a complete picture, particularly of non-material wellbeing, so additional data is needed for a holistic assessment.
Real GDP growing by 7.6 per cent
Gross Domestic Product measures the total value of final output produced within a country's geographical boundaries over a given period, usually one year. The phrase at 2015 prices indicates that the figures have been adjusted for inflation using 2015 as the base year, allowing a more accurate measure of real economic growth.
A 7.6 per cent increase in real GDP suggests the economy expanded even after accounting for inflation, likely raising real incomes and purchasing power, so individuals can afford more goods and services and material standard of living improves. This figure must be interpreted with caution, however. The sharp growth was likely influenced by recovery from a low base, since Singapore's economy contracted significantly in 2020 because of the COVID-19 pandemic. The rebound therefore signals recovery rather than a substantial improvement in long-term living standards.
Unemployment rate at 2.6 per cent
An unemployment rate of 2.6 per cent suggests Singapore was operating at or near full employment in 2021. By itself this figure says little about whether living standards improved; it is only by comparing it with the peak unemployment rate of 3.5 per cent in 2020 that we can infer an improvement.
A falling unemployment rate generally indicates a rise in material SOL, as more individuals are gainfully employed and earning incomes. Lower unemployment can also raise non-material SOL, since employment brings job satisfaction, financial stability and mental wellbeing while reducing anxiety and social unrest. The drop in unemployment from 2020 to 2021 therefore suggests an improvement in both material and non-material standard of living.
Inflation rate at 2.1 per cent
In this context the inflation rate of 2.1 per cent is not particularly useful for judging changes in standard of living. Since real GDP at 2015 prices already accounts for inflation, the inflation rate adds no further insight into material wellbeing. An inflation rate of 2.1 per cent is also relatively low and stable, so price levels did not significantly erode purchasing power. Without further data on wage growth, affordability or income distribution, however, this figure alone reveals little about living standards.
Supplementary data required
The indicators provided do not capture non-material aspects such as quality of life and wellbeing. In 2021 Singapore saw the gradual resumption of social activities, such as dining out for vaccinated individuals, while strict border controls still restricted international travel. These factors, which significantly affect non-material SOL, are not reflected in the data. To understand non-material wellbeing better, additional data would help: excess deaths from COVID-19 could indicate healthcare quality and accessibility, average working hours could indicate work-life balance, and suicide rates might reflect broader mental health and social wellbeing.
Conclusion
Overall, GDP growth, the unemployment rate and the inflation rate give only a partial indication of changes in Singapore's standard of living in 2021. The rise in real GDP and the fall in unemployment suggest improvements in material and some non-material wellbeing, while the inflation rate offers little additional insight. None of the indicators accounts for significant non-material factors such as health, mental wellbeing and work-life balance. To fully assess changes in standard of living, supplementary data on healthcare, mental health and leisure time would be necessary.