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Is Singapore facing a population time bomb?
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Is Singapore facing a population time bomb?

Man standing ahead of two ways

The ageing of our citizen population due to low fertility rates and increasing longevity will have major impact on our society and economy.

This population shift is what UOB economist Francis Tan calls Singapore’s “time bomb”. With fewer young Singaporeans, and an ever increasing number of seniors, he believes Singapore will face a challenging future especially in its workforce.

What exactly are these implications and can Singapore cope with its sternest test yet?

1+2=3

First, the ageing population, if left unmanaged, may lead to slower economic growth. This is because economic growth is largely the result of two main inputs: labour force and productivity.

Take Singapore’s growth rates between 2011 and 2014. The workforce grew by about 4 per cent, while productivity was zero, noted Manpower Minister Lim Swee Say. This resulted in our economy growing by about 4 per cent as well.

Looking ahead, Singapore is aiming for GDP growth of about 3 per cent, said Mr Lim. And it plans to do this by the simplest arithmetic: 1+2=3

Manpower growth is likely to stabilise at about 1 per cent a year in the medium term. To get to 3 per cent growth, productivity must grow by about 2 per cent a year.

“This is indeed the growth scenario we are pursuing: 1% manpower growth but 3% economic growth, by making up for the growth gap of 2% through productivity gains, i.e. 1+2=3. So far, we are progressing on the right track,” he said.

Over the long-term, resident labour force growth is expected to slow. In fact, from 2020, resident labour force growth is expected to be negligible.  

In other words, the pool of labour will shrink, and companies will face difficulties getting access to the workers they need to grow their business.

In the short-term, this may mean higher wages for workers – companies will pay more to attract the people they need.

But if this persists, the economy may lose its competitiveness. Companies may not be able to cope with the high costs of doing business here. Multinational companies may also opt to relocate their operations to a lower cost location, resulting in fewer jobs for Singaporeans.

While the challenge may seem daunting, with the right mix of strategic planning, positive attitudes and adaptable mindsets, we can turn the problem of an ageing population into opportunity.

The “silver” lining

We have begun to look at human capital differently now, especially to ensure those who wish to remain employed beyond their retirement age are able to. Our seniors are not only living longer and leading healthier lives, they are also better educated, highly skilled and motivated to stay active or contribute.  Changing mind-sets and concerted efforts have helped in enabling our seniors to remain in the workforce for as long as they are able and willing to.

Take 69-year-old Madam Lim Kok Choo, a supervisor at National University Hospital’s day surgery ward, as an example.


Retirement is something she dreads because of the fear of becoming redundant, and wasting her life away at home.


“My son keeps asking me to retire. But I say no. Working is good. Otherwise, at home, I eat, watch TV, sleep; eat, watch TV, sleep. There’s no meaning. I’m wasting my time,” she says with a laugh.


As Deputy Prime Minister Tharman Shanmugaratnam noted: "Older folks are an asset. They have wisdom, experience and they also learn on the job."

But more needs to be done to help older workers extend their careers. The Government has raised the re-employment age from 65 to 67 last year.  Companies need to give older workers a fair shot at jobs and do better in integrating them at the workplace.  For instance, employers get a Special Employment Credit, a subsidy or wage offset scheme for hiring workers aged 50 and above.

 

Different types of work arrangements have also been made available to seniors, as more workplaces adopt progressive and inclusive HC practices. For instance, companies can apply for grants such as the Age Management Grant and the Job Redesign Grant to make workplaces more senior-friendly. 

“We have to make this (integrating older workers) part and parcel of the workplace... We have not done it very well in Singapore so far and we have to do much better in this realm,” said Mr Tharman.

A Productivity Boost

Another way to cope with the slower pace of workforce growth is to focus on doing more with the resources that we have.  As Minister Heng Swee Keat had stated in his 2018 Budget speech, we would not be able to keep moving forward “unless we remain dynamic in our outlook, are increasingly productive in the way we work”. 

Singapore is transitioning from labour intensive industries to capital intensive operations (requiring higher capital investment such as financial resources, sophisticated machinery, and more automation) and involving activities which demand more from Singapore’s limited but highly skilled and educated workforce.

Take manufacturing as an example. Factories, which used to hire hundreds of workers for their assembly lines, now rely on autonomous vehicles, robotics, and artificial intelligence to produce high-value goods such as pharmaceutical drugs, satellite parts and semi-conductor chips.

British home appliance Dyson has about 1,300 workers spread out over three sites in Singapore. At West Park Tuas, its advanced manufacturing facility churns out 4 million digital fans for its cordless vacuum cleaners, which are sold in 75 markets around the world.

In fact, it is able to produce that many fans by relying on just 13 operators to carry out the production process, with much of the work carried out by dozens of robots.

Apart from manufacturing, industries across the economy are already transforming, with help from the government, labour unions and business associations. Even traditionally labour-intensive industries such as retail and food and beverage are relying less on manpower and turning more to automation for their operations.

These moves boost productivity in the economy, a critical factor in sustaining economic growth in the long run and are already beginning to pay off.  As Minister Heng had shared in his 2018 Budget speech, the productivity growth for 2017 was the highest since 2010. 

In tandem with economic progress, Singapore needs to remain open to immigration and foreign talent in order to bring in manpower with relevant skills to impart, create new industries or grow emerging ones. Having the right mix of skilled foreign workers to complement our local workforce, being globally connected and staying business friendly to MNCs looking to set up operations here, will help sustain our economic growth and vibrancy, resulting in more good jobs and opportunities for us all.

Seizing the day

Singapore’s demographic shift may be one of the country’s sternest tests. But our prospects are not necessarily gloomy.

Last year, the economy grew 3.5 per cent, the fastest pace since 2014. In PM Lee’s 2018 New Year message, he pointed out that “incomes have gone up across the board, especially for low and middle earners. We have benefitted from the global economic upswing. But more fundamentally, our productivity has grown.”

The policies are paying off, workers are upgrading their skills and companies are shifting gears to move towards more and higher value activities.

So instead of seeing the demographic change as a ‘ticking time bomb’ and something that is beyond our control, we should seize the opportunity to make the most of our situation, initiate change and overcome the challenges ahead of us. Similar to other countries with aging population, Singapore is doing what we can too to be better prepared for our future.


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