Age well, but grow the population too for a vibrant Singapore

ALARM bells are ringing over China’s longer-term economic growth prospects because of weak demographics. Early this year, China reported its first population decline in six decades. In 2022, China’s population shrank by around 850,000 to 1.41 billion people. 

India has overtaken China as the world’s most populous country, the United Nations indicated.

As its population declines and rapidly ages, concerns mount over whether China’s economy will stagnate, thereby making China assets unattractive for investors.

Perhaps, long-term investors should worry over Singapore’s population growth trajectory. The sustainability of businesses and attractiveness of assets here could be undermined by weak demographics.

Singapore’s resident population grew 2.2 per cent in 2022, reversing a decline of 1.4 per cent in 2021. In 2022, the number of residents aged 65 years and over grew at a faster pace of 6.1 per cent. The share of Singapore residents from this age group rose from 9 per cent in 2010 to 16.6 per cent in 2022. The share of seniors in the population is set to rise further.

Ageing well

Nonetheless, various factors can help mitigate the adverse economic impact of slowing population growth and rapid ageing.

Many older people remain economically active, and there is scope for the labour force participation rate among seniors to grow. 

In mid-2022, the participation rate among Singapore residents was 70 per cent. For residents aged 65 years and over, the rate in mid-2022 was 32.1 per cent, versus 17.6 per cent in mid-2010. Over the same period, the rate for 75 years and over rose from 5.4 per cent to 12.1 per cent. 

I will be among those aged 65 years and above in just over a decade’s time. If many of my cohort remain economically active, perhaps having a greyer population will not stymie Singapore’s economic growth.

Prospects for more seniors being economically active look good. Being physically weaker as one ages need not prevent older knowledge workers from continuing to be productive. More jobs could be redesigned to offer older workers more flexibility.

Greater automation and changes to work processes can reduce the physical strain of service sector roles in hospitality, healthcare, food and beverage, and retail. This means older workers can likely be productive in such jobs, too.

In Singapore, efforts to support lifelong learning and training could help ensure that workers across different age groups have relevant skills.

I think I am hardly alone in aiming to be economically active for a long time. This can help people cope with higher inflation, and make them mentally sharp.      

Moreover, if people lead healthier lifestyles by exercising regularly and being careful with their diets, the rise in healthcare costs of an ageing population will be more manageable. Currently, many initiatives are being rolled out to help people stay healthy as they age.

Welcoming migrants

Still, even if more people age well, slow population growth and ageing can hurt economic growth and business prospects.

Think about it: a growing population is needed to expand the potential customer base of businesses. Younger consumers may have a higher propensity to consume versus older ones, thus giving businesses larger addressable markets.

A younger population may lead to greater innovation, which in turn spurs economic growth. Generally, younger people consume less healthcare. As they are more economically active, they contribute more tax revenue and take up less government expenditure.

Raising the birth rate matters. Among residents, the total fertility rate per female in 2022 was 1.04 versus an average of 1.18 between 2012 and 2021, and 1.26 between 2002 and 2011. Our birth rate lags that of the US and Scandinavian countries.

Can more generous parental leave, better childcare facilities, higher baby bonuses, more help for married couples with housing and various other pro-family measures boost the birth rate? 

Maybe not, even though the birth rate should rise next year, which is the auspicious lunar year of the dragon. 

Some people cannot find suitable partners, while others may choose for lifestyle reasons not to have children or limit the number of children they have. Marrying at a later age may also reduce the number of children.

Being rich and stable, Singapore can grow its population by welcoming migrants. It is multiracial, multi-religious, politically stable, economically dynamic and well-connected regionally. Infrastructure, education, healthcare, air quality and public safety are good. 

In short, Singapore can draw people from neighbouring countries who are looking for better wages and quality of life.

Adding new migrants can boost population growth, lower the median age of the resident population, raise the labour force participation rate and drive greater economic dynamism. 

However, handling migration well is tricky. Will new migrants assimilate? Will they take jobs away from existing residents? While Singapore is cosmopolitan and has good public infrastructure, adding more migrants may change the social fabric, create anxiety over over-crowding and raise property prices.

Still, Singapore should have the resources and long-term planning capability to manage an influx of migrants.

As Singapore transitions to a new generation of political leaders, investors may wish to see how the issues of migration and population growth are handled. Prospects can be exciting for many businesses if Singapore, which is increasingly seen as a top-tier city globally, grows its population size significantly. 

As at mid-2022, Singapore’s population totalled about 5.6 million – much smaller than cities such as London, New York and Shanghai. Should many populous Asian cities grow their economies rapidly, Singapore’s lack of population heft puts it at risk of being eclipsed. Perhaps, we should dare to dream of being a 10-million-strong city in the near future. 

Having more people age productively and gracefully needs to be complemented by a growing population for Singapore to be vibrant. This bodes well for the outlook for equities and real estate here.