Drastic improvements in life
expectancy and a sharp fall in the country’s birth rate have led to rapid
population ageing. Between 1965 and 2014, life expectancy jumped
by 16.1 years, while the birth rate plummeted from 29.0 births per 1000
population to just 9.1. The net result is a rapidly ageing population and the
trend is unlikely to be reversed anytime soon. Singapore is sitting on a
demographic time bomb.
The rate at which Singapore
is ageing is remarkable. Singapore will go from being an ageing to a super-aged
society in just 27 years. Japan, China,
Germany and the United States took or will take 36, 32, 76 and 86 years to make
that transition respectively. This rapid speed implies that Singapore will have
less time to prepare itself for the looming ‘silver tsunami’.
Singapore has always counted
on its human capital for national development, but — at current fertility and
mortality rates and with zero migration — the population will start shrinking
as early as 2030. If normal migration flow is maintained, the population will
begin shrinking in 2047. To survive the next 50 years, the country needs
innovative solutions to defuse this demographic time bomb.
The government will be under
pressure to increase spending for aged care. One solution is to shift the
fiscal burden to the younger population in the form of higher taxation. But this
approach risks intergenerational inequity and tensions when the voting power of
the younger population declines vis-à-vis the larger older population. In 1965,
the old-age dependency ratio in Singapore was 4.9; by 2026, it is projected to
hit 30.1 — for every 100 working age adults, 30.1 will be dependents.
An ageing population will
lead to a reduction in military strength. The Singapore Armed Forces is made up
of mostly male conscripts. The number of 18 year-old males peaked in 2012 at
37,619. By 2026, it is expected to fall to only about 32,050. And when the
total population starts to shrink in 2047, the number will have fallen to just
29,906 — a reduction of 20.5 per cent from its peak.
A shrinking population also
hampers economic growth by reducing the supply of young labour. As the labour
force contracts, national output will fall unless there are significant gains
in labour productivity. The core labour force (those aged 25–49) in Singapore
is expected to peak in 2020 at approximately 2.15 million workers. By 2047, we
expect to see a shortfall of 341,570 workers — a 15.9 per cent drop — from its
height. For a country that spends 3–5 per cent of its GDP on defence annually,
slower economic growth will impact military expenditure too.
So how can Singapore manage
these demographic challenges?
Current measures to care for
the aged do not consider the desire of many to age within their own
communities. Singapore is starting to change this. Many of the technologies
being deployed under the Smart Nation initiative will help senior citizens to
age safely in their own homes. Telemedicine — the use of cutting-edge
information communication technology and self-administered medical gadgets to
provide remote medical diagnosis, treatment and care — could reduce non-essential
visits to the hospital for senior citizens. Meanwhile, autonomous,
self-navigating vehicles will enhance senior citizens’ mobility when they do
need to travel.
Between 1999 and 2013, Singapore’s health expenditure rose from 2.8 per
cent to 4.6 per cent of GDP. Much of this increase can be attributed to a
twofold jump in the number of people aged 65 or above. But by leveraging on
certain emerging technologies, future increases in health expenditure can be
contained. For instance, a new class of biotech drugs called biosimilars are
20–30 per cent cheaper than their biologic counterparts but just as effective
and safe. Already prescribed in Europe and Australia, biosimilars make
difficult and expensive treatments more affordable.
As the population shrinks,
it is also vital to ensure that the economy continues to prosper and
Singapore’s defence capability is not compromised. With rapid advances in ‘deep
learning’ systems, advanced robots that can outperform humans in some tasks may
soon be a reality. McKinsey Global
Institute estimated that by 2025, automatons could produce the
output of 110–140 million full-time workers, so it is conceivable that they
might one day address the country’s population shortfall. From being caregivers
to labourers to sentries, automatons could well be ubiquitous in the future.
Severe, rapid ageing need
not spell the end for Singapore. It presents real opportunities too. Singapore
is not the only ageing society
in the world — there are many. With a global ‘silver economy’ estimated by
Merrill Lynch to be worth US$15 trillion by 2020, the first-mover advantages
and lessons learned from the application of emerging technology to tackle
ageing could prove invaluable for Singapore.
Tan Teck Boon is a research
fellow at the S. Rajaratnam School of International Studies (RSIS), Nanyang
Technological University, Singapore.
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