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By: Yutika Agarwal
Research Head: Shawn Tenh
Editor: Praharsh Mehrotra
Illustration by Chen Hsuan Ju
Abstract
Based on the predictions done by the UN, it is estimated that 47% of Singapore’s population will be over the aged 65 years or above by 2050. This has been a result of the declining fertility rate and increasing life expectancy. Singapore has the highest life expectancy at 83.2 years and fertility rate is just 1.14 (Goldsmith, 2019).The greater restrictions that have been put in place on immigration have also led to intensifying population ageing issues. With an older population and shrinking labour pool Singapore is facing the issue of maintaining steady economic growth.
1. Capital As the population of Singapore is ageing there are many issues with regards to capital. The CPF system followed by Singapore is fully funded and has a defined contribution system. There is encouragement for working as long as possible and self- reliance. While this may look good the bottom tier is affected immensely as they are unable to accumulate sufficient funds and in their old age need to have very low basic needs. Earlier Singapore had really promoted the purchase of houses but in the present scenario when the elderly is in need of funds due to the volatile market and shortage of options to monetize housing assets there is a major risk to the retirement adequacy of the elderly. The health care costs faced also increase as the population ages. There is a requirement of long-term care and it requires a high degree of human interaction and it is a sector where it is difficult to reduce costs. A way to finance the costs associated with the ageing population is via increasing taxes. The Singapore government in 2018 announced that they would be increasing taxes(Min, 2018). The increase of taxes though could lead to the issue of intergenerational transfers and their being an unfair bias against the baby boomers as a major part of the reserve surplus is generated by the baby boomers in 1980s and 1990s. 2. Labor The labor force growth rate is estimated to be 1% till 2020 and 0.5% till 2030 (Teng & Gee, 2014). The resident working age population would be decreasing while the dependent population increases. This will cause an increase in the dependency ratio. Over the years due to the decline in population and shrinking workforce Singapore has relied on immigration and foreign labor in order to meet the labor demands of the country and reduce the impact of population ageing. The increase in immigration can bring in problems for the local residents as well as they can depress the wages and may disturb the social harmony. The productivity of employees also reduces as they age. While Singapore is moving from a labour intensive market to a more capital intensive market there is still scope for an increase in productivity of existing workers by promoting life long learning. 3. Land The population of Singapore has increased from 1.6 million in 1960 to 5.6 million in 2018. As the population of Singapore grows the demand for land also increases. Being an island nation Singapore has very limited land. Earlier 24% of Singapore’s land was used for agriculture but today the number is negligible. While average land consumption has decreased there has been an increase in demand and density for land. With the ageing population there is a need for building more social infrastructure but the limited land poses as a challenge. In order to accommodate the inflow of immigrants as well and ensure mobility and avoid overcrowding Singapore will have to look for more sustainable solutions. 4. Marriage and Childbearing Singapore’s total fertility rate (TFR) is 1.14 which is well below the replacement rate of 2.1. Various measures have been taken by the Singapore government like the parenthood packages, tax rebates, leaves and childcare options. The labour force participation at present for Singapore is 68% and there isn't much that can be increased in this aspect. Even if measures are taken by 2035 to increase workforce participation the workforce will increase only by 2% but that will not fulfil the needs of the ageing country (Khanna, 2018). The TFR is low as over the years more Singaporeans are choosing to be single. It has been noticed that countries with higher HDI tend to have a higher marriage age and this had lead to people having fewer children, Also as the participation of women in the labour force is increasing their willingness to have children has reduced due to the substantial financial and time investment required.Various measures have been taken by the Singapore government like the parenthood packages, tax rebates, leaves and childcare options (Marriage and Parenthood Trends in Singapore, 2012). There hasn’t been much improvement and a decline in the population intensifies the ageing problem faced by the country. 5. Social infrastructure Development With the ageing population a large part of the government expenditure is on social infrastructure development. The government has been investing in various community service programmes like the Community Silver Trust where $300 million was given to promotes voluntary welfare organisations (Population Sg, 2018). They have also implemented the Community Network for Seniors. The MOM also emphasises on life-long learning For the healthcare aspect the government spending on health care has been increasing with the government spending $10 billion in 2010 to $14 billion in 2017 and the increasing trend continues (Ho, 2018). They have in place the 3M funding programme (Medisave, Medishield and Medifund) and have a cost sharing system. As the population is ageing there is an increase in healthcare costs and the families who are said to be safety nets are under pressure. As the country develops the health care inflation is also increasing. According to the CPF data 40% of the CPF members at the age of 55 do not have the minimum $36,000 Medisave minimum sum which poses as a major issue (Teng & Gee, 2014). 6. Social Capital The old age dependency ratio in Singapore has almost doubled in the past 20 years and has reached 15.03 at present according to the world bank. Immigration is looked as a solution to deal with the shrinking work force. According to a research by the IMF immigrants take over domestic jobs and depress the wages and negatively affect the domestic economy but this can be dealt with proper policies. The immigrants will fill in the gap in the labor market and will add to the vibrancy of the economy. 7. Conclusion Ageing population has an impact on various aspects of the country ranging from the economicimpacts to social impacts.The government of Singapore will have to take a multidimensional approach to ensure that the country ages gracefully.
References
1. Khanna, V. (2018, January 31). Straits Times. Retrieved from Reframing the debate on ageing and immigration: https://www.straitstimes.com/opinion/reframing-the-debate-on-ageing-and-immigration
2. Marriage and Parenthood Trends in Singapore. (2012, June 1). Retrieved from Stratergy Group Singapore: https://www.strategygroup.gov.sg/media-centre/press-releases/marriage-and-parenthood-trends-in-singapore
3. Ho, T. (2018, Feburary 6). Singapore’s Ageing Population: The Financial Implications Of Our Country Growing Old. Retrieved from Dollars and Sense: https://dollarsandsense.sg/singapores-ageing-population-financial-implications-country-growing-old/
4. Teng, Y. M., & Gee, C. (2014). Population Outcomes: Singapore 2050. Singapore: Institute of Policy Studies.
5. Population Sg. (2018, April 22). Strengthening community support for the elderly. Retrieved from Population Sg: https://www.population.sg/articles/strengthening-community-support-for-the-elderly
6. Min, C. Y. (2018, January 23). Do taxes in Singapore really need to go up? Retrieved from Straits Times: https://www.straitstimes.com/business/economy/do-taxes-in-singapore-really-need-to-go-up
7. Goldsmith, C. (2019, November 4). Sing the blues: trade disputes and an ageing populationare hampering Singaporean growth. Retrieved from World Finance:https://www.worldfinance.com/special-reports/sing-the-blues-trade-disputes-and-an-ageing-population-are-hampering-singaporean-gro