SINGAPORE recently saw the launch of its first inter-generational playground and childcare centre within a nursing home, the St Joseph’s Home in Jurong West.
It offers a chance for the elderly to interact and play with youngsters, and more such playgrounds have been mooted around the island. The creation of inter-generational facilities comes during a time when Singapore’s population is aging rapidly.
According to data from the Department of Statistics (DOS), about 25% of Singapore citizens will be over the age of 65 years by 2030, compared to about 12.5% in 2015.
Once 21% of its citizens are above 65 years, Singapore will enter the ranks of a “superaged society”.
This should happen sometime in the late 2020s. More initiatives, in addition to intergenerational playgrounds, will likely emerge to manage the aging of Singapore society.
An aging population will certainly have an impact on Singapore’s economy. If the retirement age remains fixed and life expectancy continues to increase, there will be fewer people working and paying taxes.
There is also likely to be increased health costs. Higher spending commitments and lower tax revenue are not a favourable combination for governments. In Singapore, this may lead to higher tax rates on a shrinking workforce and corporations, and perhaps even a new tax regime for retired folks, apart from the omnipresent goods and services tax that applies to all.
At an individual level, higher life expectancies will mean that people need much more money to see out their longer retirement years. The average life expectancy of Singaporeans is 83.1 years, the third highest behind Japan and Switzerland, according to data from the World Health Organisation.
Singapore is not a cheap place to retire in unless you decide that you want to become a hermit. Singaporeans may be increasingly encouraged to mobilise their savings from an early age and invest in riskier financial products for the longer term.
Behaviour Change Needed
However, challenges to mobilise savings remain because, according to a report released by Standard Chartered Bank earlier this year, the life cycle hypothesis (LCH) does not seem to apply for many countries in Asia, including Singapore: People tend to save for longer in the region. This obviously means that they spend less too, which is not good for economies driven by consumption.
The LCH describes the impact of demographic change on savings: Younger people borrow against their future income, while workers late in their careers should have the highest savings. Finally, those over 65 years should start drawing down their savings after the retire, that is, start dis-saving. In Singapore, this is reflected by both Retirement Sum and CPF Life payouts, which kick in from the age of 65 years.
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However, LCH cannot be considered in isolation. The Singapore government has, and will continue to, introduce policies to deal with the aging issue. The continued raising for the retirement age is one. This will raise the working age population and delay gains in total dependency — a measure showing the number of dependents, aged 0 to 14 years and over the age of 65, to the total population, aged 15 to 64.
What are some other solutions to the aging problem in Singapore? Actively encouraging people to have babies is ongoing. However, the high cost of raising children in the city-state is a barrier to many, even with the generous government grants in place at present. Reports of theft of baby milk powder is a reflection of this high cost.
Singaporeans may not like it, but the easiest solution to an aging population is to encourage more people to come and work in Singapore.
The free movement of workers into Singapore is currently a political powder keg. It will accentuate concerns over lower wages, job losses for locals and overcrowding, and place more stress on transport, healthcare and education infrastructure as well as housing.
However, reopening the tap for migrant workers seems an inevitable outcome as Singapore’s population ages. Otherwise, the labour force will weaken, while economic growth and the size of the market in Singapore for goods and services will also decline. Even without the aging factor, it remains a challenge to find sources of growth for Singapore’s economy going forward.
As noted in this column in February — How Tourism Affects Our Population Numbers — a leading indicator of a rising Singapore population is Changi Airport Group’s plan to expand Singapore’s international airport to a capacity of 135 million passengers per year by around 2025.
Such a huge capacity will need a much larger population than the current 5.6 million to support it.
Thus It Was Unboxed by One-Five-Four Analytics presents alternative angles to current events. Reach us at [email protected]
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