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The Dilemma of Population Decline

Is the Singapore Government’s insistence on maintaining high economic growth in the face of declining birth rates causing social problems while potentially hampering its efforts to encourage procreation?

According to a report by the Institute of Policy Studies (IPS) titled “Population Outcomes: Singapore 2050” Singapore’s total fertility rate (TFR – or the average number of babies born to a woman in her child-bearing years) has been stagnating at around 1.3 births per woman since 2003, way below the replacement rate of 2.1 births per woman. To put it simply, there have been more deaths than births in Singapore for over a decade. By 2030, there will only be two working-age citizens supporting every elderly Singaporean above the age of 65, down from the current five. This projected statistic was released in the 2013 Population White Paper by the government, illustrating how Singapore’s declining birth rate will lead to a plethora of undesirable economic consequences – reduction of the workforce, greater tax burdens on successive generations, lower productivity and shrinking economic growth.

Economist Hoon Tian Teck from the Singapore Management University (SMU) has observed that “a shrinking population most directly slows down economic growth by shrinking the size of the labour force”. Coupled with a rapidly ageing population, this would mean a smaller base of working adults having to support a larger base of senior citizens. Successive generations would have to shoulder heavier tax burdens to fund increased government spending on healthcare and social services for the elderly. Moreover, fewer workers imply that businesses would have to scale down their operations or compete with other firms for labour. This manpower crunch could also deter foreign corporations from setting up offices in Singapore, as our market becomes less cost-competitive relative to our regional counterparts.

In light of this, the government has implemented several counter-measures, such as encouraging senior employees to work for another two years even after they have hit the retirement age of 65 years old. The government has also attempted to raise productivity levels through funding and support for initiatives like SkillsFuture, which aim to help Singaporeans acquire new skills or become more proficient in their line of work. However, these interventions – aimed at easing the tight labour market and alleviating the consequences of a smaller workforce – would still be insufficient to maintain current economic growth rates – if not for the 1-million-odd foreign workers on our shores.

Foreign workers in Singapore
Foreign workers in Singapore

The large number of foreign workers in Singapore has been a bone of contention among the public. (Photo: Wall Street Journal)

Unfortunately, the import of foreign labour has created much societal stress, as seen from the public uproar over the Population White Paper’s proposal to raise Singapore’s population to 6.9 million, with foreigners making up more than a third of the populace. Additionally, raising productivity levels may mean longer hours for employees, as each worker is assigned additional duties. This would in turn affect work-life balance and the physiological well-being of workers. Under such circumstances, it is no wonder that some Singaporeans have been questioning the authorities’ insistence on maintaining current growth levels despite the risks and costs to our society. In a post on the IPS Commons website, “Economics Myths In The Great Population Debate”, economists Donald Low, Yeoh Lam Keong, Tan Kim Song and Manu Bhaskara have expounded on how with the emergence of fast-growing cities in Asia, Singapore’s need to maintain a certain growth rate or risk stagnating and eventually become irrelevant is not substantiated. This begs the question: Do we truly need to mitigate the negative economic effects of a declining population and maintain current growth rates?

Ironically, the government’s relentless pursuit of economic growth may actually cause our TFR to fall even further. With economic growth comes issues like inflation, a higher standard of living and more career opportunities, which are underlying reasons that deter couples from having children. Indeed, Paulin Straughan, a sociologist at the National University of Singapore has suggested that most young professionals are happy to put off courtship and marriage as they build their disposable income.

Perhaps, “citizen preferences should be taken into account for future policy planning”, as the economists behind the post on IPS Commons have argued. “People’s concerns over the size and make-up of the country’s population, their interest in welfare provision, and their pursuit of a sense of well-being reflect their aspirations in terms of the kind of society they want to live in.” In shifting the focus of countermeasures alleviating the impact of declining birth rates from economic growth to the well-being of our people, we may become materially less well-off as a country but much richer at heart.

Top photo: An elderly crossing sign, The Huffington Post

Disclaimer: The opinions expressed in this publication are those of the author’s and do not reflect the opinions or views of Inconvenient Questions or its editorial team.


About the author
Gavin Lu is a student from the NUS Communications and New Media department. He wrote this article as part of a project with IQ.