Population White Paper is unpopular and unsustainable

January 30, 2013 · by · in , ,
Artist impression of East Coast Park in 2030

Artist impression of East Coast Park in 2030

I have yet to read an online commentary that is receptive to the Population White Paper. Most don’t even get past the dreadful 6.9 million figure. While the government tries to convince us of this need for further population explosion and explain how this can be managed with an expanded rail network, new housing estates and more green spaces, nobody is listening because we lapse into an uncontrollable fit when any mention of an increase is brought up.

Our leaders may regard the negativity as irrational and what they are proposing as inconvenient but unavoidable, but we should ask if they have started off on the wrong foot when examining this issue of an ageing population. Assumptions and lines of thinking need to be challenged.

Firstly, the government’s style is to look at sustaining economic growth and work backwards to decide the population base that is required to support this growth. Perhaps another way is to determine an optimal population and look at ways of sustaining GDP growth per capita based on that, instead of gross GDP growth. This could necessitate a population decline that will be more palatable to Singaporeans. As we have witnessed in the past decade, increasing population led to worsening quality of life despite the growth, so what is the point?

Another question we should ask: Is a dwindling support ratio really as terrifying as it appears? We may be better off adjusting to a new normal than to try to artificially prop up the number. A lower support ratio can be mitigated by increasing social spending, encouraging greater savings, improving health levels, raising the retirement age, and boosting the workforce from within core resident population. Instead, the government can’t look beyond a straight and easy answer of inward migration to boost the ratio. To make matters worse, the resultant higher cost of living, overcrowding and competition of jobs have a direct adverse effect on these aforementioned mitigating factors.

Then there is the productivity drive. The government is basically conceding defeat on this front by claiming that 2-3% improvement is a stretched target and 1-2% is a more realistic longer term aim. The Paper cites OECD countries with levels of productivity growth averaging 1-2%, but it is a red herring to compare Singapore to countries such as Japan. We may have a first world economy that churns out wonderful numbers on the aggregate level, but this is done with brute force factor accumulation (mainly labour) à la developing economy style. In short, there is tremendous quantity but low quality in the kind of growth we achieve. Therefore, I remain unconvinced that our productivity can’t improve further.

Lastly, there is the issue of true sustainability. Despite the title “A Sustainable Population for a Dynamic Singapore”, the glaring omission in the Paper is what happens after 2030 with a population of 6.9 million? Do we need to support this population with further increases? If so, aren’t we just pushing problems to the future generation? Ironically, the Paper says “We must thus rely less on foreign labour, use our resources better, and redouble efforts to improve productivity. That is the only sustainable way to grow the economy and raise real wages”, before going on to state that productivity growth will be limited and we need more foreign labour. There is no better way of contradicting oneself and admitting that the solution as laid out in the Paper is not sustainable.

What I’m guessing, from the government’s perspective, is that this silver tsunami caused by the retirement of baby boomers is a huge one-off wave that the country has to ride through before it realigns to an equilibrium of lower birth rates seen since the 1970s. That explains why the population projection consists of a large jump in foreigners. These foreigners will mainly be in the construction, healthcare and domestic care sectors where the intake is elastic. Arguably then, when the tsunami has subsided, we can tighten the supply and revert towards a core residency of 5 million.

But it can’t just be about importing more people to boost growth. This would be a sad example of our poor productivity if it took the various government agencies one whole year to come up with a solution as simplistic as that. Even if it really is that simple, the government has to explain it properly to Singaporeans and it hasn’t done a convincing job so far. I am no economist nor expert in demography and I recognise that this is a difficulty problem with no easy solution that is both workable and tenable to all Singaporeans, but maybe the government should listen more to its citizens than the economists and demographic experts.

Ultimately, it is better to allow Singaporeans to have a say than to shove an unpopular solution in our faces. If it has to come down to hard choices between foreigners, higher taxes to fund social spending, a stagnant economy, retiring later, etc, let the people pick which pills to swallow.

Related posts:

Declining birth rate is a concern or is that a myth itself?

Beware the ageing population false dilemma

It’s not just babies we have to produce more of

Related posts:

  1. Beware the ageing population false dilemma
  2. Still chewing over the population debate
  3. Declining birth rate is a concern or is that a myth itself?
  4. How to reduce the need for 6.9 million population