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Singapore’s Growth Problems

By Loo Beng Chye (B_cool) from Singapore (Frenzy) [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

After almost a week of debate, Parliament endorsed the White Paper on Population with an amendment last Friday.

The white paper that was initially proposed called for a 30% population growth over the next 17 years (30% by 2030) to ensure Singapore will have enough workers to maintain its economy. The projected growth rate will still be nearly half the historical growth rate.

An ageing workforce and one of the lowest birth rates in the world currently threaten Singapore’s growth. The white paper issued by the government plans to address this by calling for family growth incentives to increase the population of Singaporeans, and an increase of foreign workers.

Inside the plan

The plan includes a package of incentives aimed at encouraging Singaporeans to marry and have children. Called, “Hey Baby,” it includes funds for assisted fertility, extended maternity and paternity leave, adoption benefits, discounted housing, even a social networking and matchmaking program.

It’s a tricky proposition; more Singaporeans are staying single longer. Grooms are older on average than they were forty years ago; 30 in 2011 from 26 in 1970. Brides, as well, are five years older on average; the median age is 28 from 23 in 1970.

Incentives and disincentives for family growth are not new to Singapore; the government has battled issues of overpopulation and underpopulation for decades. Since 1987, the government has given financial incentives and extended maternity leave to encourage married couples to have children. It hasn’t worked.

While presenting the plan, Deputy Prime Minister Teo Chee Hean warned of potentially dire consequences for Singapore if the number of native births didn’t increase. “What does this mean for Singaporeans? Higher taxes on those working, to fund subsidised healthcare for a much larger number of seniors. Slower business activity and less investment in new sectors, leading to fewer job and career opportunities. Young Singaporeans may decide to leave for more exciting opportunities in other growing cities,” he said.

Welcome, (foreign) workers?

A lack of new workers has created an uneasy reliance on foreign workers. 28% of the current population comprises of foreign workers, a number that the Singapore government plans to grow to 36% by 2030.  This has doubled since 1990, when only about 14% of Singapore’s population was of foreign birth.

Less than nine months ago, Prime Minister Lee Hsien Loong told reporters that despite problems with immigration, it was good for the country. “So you want the foreign workers but at the same time you don’t want too many and an uncontrolled flow, which can cause problems,” he said.

In the announcement of the plan last week, Mr Teo was quick to dispel any idea that a need for a foreign workers translates into a welcome.  “We defend Singapore and Singaporeans, because we are the stakeholders of our country — and our families, our homes and our futures are here. No foreigner can feel the same way. We may help to ensure the safety of foreigners who are here in time of conflict, but we are not defending their families or futures. We are defending ours and that will never change,” he said.

The white paper’s amended motion that Parliament passed last Friday supports maintaining a strong Singaporean core.  This will be done by encouraging more Singaporeans to get married and have children, supplemented by a calibrated pace of immigration to prevent the citizen population from shrinking. It also calls on the Government to attend to current concerns in areas like transport infrastructure. Part of the amendment to the motion also calls on the Government to carry out medium term reviews on population policies and assumptions.

The Foolish bottom line

Earlier this year, the Singapore Economic Development Board (EDB) reported record investment commitments in Singapore in 2012, and expects the creation of 19,000 to 22,000 new skilled jobs in 2013.  While the EDB reported a continued confidence in Singapore’s attractiveness as a business location, the question remains if those jobs will be filled, and by whom.

This article was written by Molly McCluskey. Molly is a contributor at fool.com

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