The population must continue to grow…for now

In my earlier post, I stated why Singapore won’t be overcrowded even with a 6.9m population. But assuming we can stave off over-crowding, we should still ask why Singapore’s population has to grow in the first place. The short answers are: Blame the baby boomers, and blame our societal expectations.

Blame the Baby Boomers

Why “Blame the baby boomers”? Because Singapore is about to face one of its largest demographic changes in the next 2 decades – a doubling to tripling of elderly folks. (I will be one of these elderly as well.) The chart below shows that this “silver tsunami” is nearly upon us.

This large influx of elderly is unprecedented in our young nation’s life. The productive years of the baby boomers helped keep Singapore’s tax base low because we had many working adults paying for very few elderly and a shrinking base of children. In the future, much fewer working Singaporeans will be supporting the elderly and the young. I will not be surprised to see my children grow up with higher income taxes and GST being imposed on them.

If taxes must eventually rise, they should not rise so much that it deprives our future generation of the standard of living that we enjoy today. A very real example is happening in my family today. Today, my 3 siblings and I spread out the cost of caring for my parents, but in the future the cost of taking care of me will be borne by my 2 children only. It therefore makes some sense at the “country level” to absorb some foreigners to spread out the tax load.

There is a common netizen complaint that the PAP is treating its citizens like economic digits when it explains why foreign workers are needed. To me, this is a hollow complaint that can only come from people who take today’s “good life” for granted. You can be idealistic about the political future of Singapore, but you must also temper it with the realities of the world we live in. Idealism cannot wish away the silver tsunami and its future cost to the younger generation. To the PAP’s credit, they are trying to use policy to reduce the future cost impact to the younger generation, so that the younger generation can chase their dreams like we did.

The litmus test will eventually come when GST is set to rise. (Why GST? Because a consumption tax is more efficient at generating revenue from tax dodgers.) I won’t be surprised to see a 10% GST in future. How many Singaporeans are willing to see a GST increase without complaining, if they knew that the revenue will be used to pay for  elderly care?

We will also need more actual foreign labor to take care of the elderly. My sister who works as a nurse tells me that the local nurses are being prioritised for the community hospitals which are closer to the ground and therefore interact more frequently with the elderly who cannot speak English. Many more foreign nurses are needed to support the doctors in our hospitals. Singapore may train as may bright young doctors as it wants, but they are useless.

Blame our societal expectations

The second reason why Singapore’s population will need to grow for now is due to our expectations on our children. As more Singaporeans receive a better education, they will aspire to higher paying white/blue collar jobs. No one will want to take on low-paying support jobs like being a cleaner. But somebody has to do the work.

Singapore’s population cannot grow forever. Even the PM has said that in 2030, the target population should be less than 6.9m. The question then is what Singapore would look like when our population stabilises.

There are two HR models that Singapore could adopt:

• One is to be Nordic, where the entire local population handles all kinds of work from the low-skilled to the high-skilled. This requires Singaporeans to break the mindset that blue collar work is “lower ranked” and should be avoided. It will also mean that Singaporeans must be willing to pay blue collar workers much more than today, so as to be on par with white collar pay.
• The other is to be Dubai, where the local population concentrates itself on higher tier work. Foreign transient workers are used to handle the lower-skilled work.

It should be obvious to the reader that the PAP has chosen to emulate Dubai over the Nordic countries. I believe the Dubai model makes sense for a small country like Singapore, even though the Nordic model may be a more economically sustainable model. This is because the Nordic model is not culturally sustainable in Singapore. The Nords require 80% of their population to be working, with a large proportion in the low/mid-skilled blue collar sector. But few Singaporean parents are willing to let their children grow up to work in the low/mid-skilled sector, and few Singaporeans are willing to pay more for the same service. I suspect that such mindsets will take a long time to change, if that were even possible.

So if we want to cater to the dreams and aspirations of our local citizens, then we must have someone else to do the lower-skilled “dirty work”. There will always be some other country lower than Singapore in the development ladder, so we will continue to have “unlimited” supply of cheap foreign labor for the foreseeable future.

Furthermore, there is a future wildcard that may cause the Nordic model to collapse, and that is technology. When you think about how technology has changed jobs over the last 40 years (such as the death of typewriters and the birth of word processors and cloud computing), it is possible that similarly disruptive technology will change the jobs of the future. The jobs that are most at risk of being replaced by robotic technology are the lower-skilled jobs. One can only imagine how the Nords will react when a significant portion of its population finds itself out of a job because it was replaced by robots. This is why I have also told my children that they must continuously improve themselves because the competition is not just from foreigners, it is from technology as well. You can keep the foreigner out of our shores through immigration laws, but there are no laws against being replaced by a robot.

Once we have safely traversed the silver tsunami in the coming decades, it may actually be possible for Singapore’s population to start shrinking progressively without disrupting our livelihoods. Our TFR will probably never reach 2.1, because the experience of all developed countries is that education is the best contraception. When we have less locals and less need for fervent construction, we can also afford to have less foreigners to support locals and our construction needs.