Disappearing Nation?

By: Lim Ben Jie

Based on an article in Forbes Asia, May 2012 edition where Lee Kuan Yew, the former prime minister of Singapore wrote ‘Warning Bell for Developed Countries: Declining Birth Rates’, he has stated his strong concerns regarding Singapore’s replacement rate that ensures the reproduction rate which keeps a population stable. Right now, many men and women are still single way beyond the ages of 30. Singaporean woman especially are no longer dependant on their male counterparts economically and socially as well. For a country to have a stable replacement rate, 2.1 is the number which all developed nations should strive to achieve. However, this is not the case in Singapore where the replacement rate is only 1.08 for its Chinese citizens, 1.09 for its Indian citizens and 1.64 for its Malay citizens. As a result, the majority race in Singapore will see its numbers half for every successive generation within the next 18 to 20 years ahead.

This is a grave concern especially for the government. The consequences are seen in other developed countries for example Japan where they are now known as an aging nation. The combination of a population who has higher life expectancy and also a declining fertility rate has hastened the process of population aging in many countries around the world including Singapore. In these countries, the younger generation will have to work harder to sustain its older generation. Based on a report by the Singaporean government in 2011, seven working adults supported one retiree. By 2030, 2.3 working adults will have to support one retiree in the republic and as of now, Singapore has 340,000 people over the age of 65 while its working population number around 2.36 million people between the ages of 15 and 64 years. A different picture is painted in the year 2030 when senior citizens over the age of 65 will number 900,000 and only 2.04 million people will be in the Singaporean workforce who happens to be between the ages of 15 and 64.

In terms of supply and demand, we could look at the declining replacement rate from many different angles. For one, the supply of male who are single is relatively higher as compared to women. Single men between the ages of 30 and 34 make up 44.2% as compared to women at a relatively lower percentage of 31.0% who are still single at the ages of 30 to 34. As a result, many men are ‘chasing’ after fewer women in Singapore. The trend in Singapore seems to dictate that many men are now forced to wed non-locals from neighbouring countries like Malaysia, Indonesia and sometimes beyond Asia. Quoting a fact from Malaysiakini writer Leong Sze Hian who wrote ‘Things you need to know before marrying a S'porean’ dated August 14, 2010, she states that 4 out of 10 marriages are between Singaporean and non-Singaporeans which is at an all-time high in the republic that is home to 5.18 million people.

Following that, in terms of labour supply and demand of the Singaporean workforce, based on Mr. Lee Kuan Yew’s article, the number of individuals who are born locally as Singaporeans will decline over the next few years. This will result in the demand for locally born labourers increasing more than the supply of locally born labourers and as a result, wages paid by employers to employees will increase over time as the labour market will need to readjust to its new equilibrium supply and demand position. Employers in the republic will have to fork out higher salaries to attract Singaporeans to take up high skilled jobs which are abundant in the city-state that is well known as a financial hub within the South-East Asian region. Employees will benefit initially when their salary goes up but cost of living may rise in tandem over the long run therefore, a lower replacement rate of Singaporean born citizens is in fact detrimental to the nation.

The supply and demand of goods and services will see lower equilibrium level as well. Consumption will fall drastically due to lower workforce numbers which constitutes as a shrinking labour market. The greatest effects are placed upon businesses in Singapore where the demand for both normal and inferior goods will decline. Fewer young people will mean fewer laptops, cars, iPhones, iPads and clothes that will be sold. Domestic consumption plays a crucial role in economic growth of many nations however, the Singapore that we know of today is barely able to drive economic growth solely on domestic consumption.  Therefore, in future when domestic consumption drops as a result of declining numbers of young people and the higher numbers of senior citizens with low spending power, it will result in a weaker Singaporean economy that can be stagnant in nature.

In short, the government realises the dilemma that Singapore is facing and has initiated actions to encourage locals to reproduce. The main concern of parents when deciding to have children in Singapore is the high cost of raising them in the city state. Therefore, nuclear families are the norm in Singapore these days. Parents want only the best for their children and will direct most of their resources to either one or two children in their family. The competitive culture in Singapore also adds to the burden of parents who have to compete to enrol their children in good schools and universities. The government understands this and  have introduced improvements in quality child care, leave entitlements and financial incentives to help lower the cost of raising children. In doing so, one would expect that the nation will be seeing an increase in replacement rates of its citizens; on the contrary, the numbers are going down instead. Unless and until the government provides more benefits like income tax reduction or heavy subsidy for the cost of raising a child in Singapore, the republic is destined to see declining numbers of state born Singaporeans over the next few decades.