Silver tsunami & dwindling workforce can destabilise economies: Lee Yi Shyan

SINGAPORE: Senior Minister of State for National Development and Trade & Industry Lee Yi—Shyan has painted a sobering picture of an ageing population and shrinking workforce.

Speaking in Parliament on the Population White Paper and Land Use Plan on Wednesday, Mr Lee pointed to the experience of Asian neighbours like Japan and Taiwan as examples of how the silver tsunami and dwindling workforce can destabilise economies.

For example, a city outside Nagoya called Gifu has seen shops along the main street closed for good.

In Hokkaido, in a small town called Yubari, half of the population is above 65 years old.

Mr Lee said Yubari’s small working population means a measly tax base.

Four years ago, the city government went bust after owing a debt of US$315 million. The city was later forced to embark on an 18—year austerity drive.

Mr Lee said: "It retrenched half of its civil servants. Public service in the City was badly affected. The public library was gone. Six primary schools merged into one. The General Hospital closed down two thirds of its facilities to save utilities. It also halved its number of ambulances and asked its elderly patients to walk to the hospital by themselves."

The effect of two decades of economic stagnation in Japan, said Mr Lee has led to what is described as "the Waniguchi (crocodile’s mouth) effect" — Soaring public expenditure coupled with a drop in tax revenue.

Mr Lee said the huge silver tsunami is destabilising Japan.

He said the country did not manage to raise its working population because it could not build a consensus to allow immigration to boost the workforce.

Similarly in Taiwan, Mr Lee pointed to an article which described the economy as "a small tax revenue country but large welfare state."

Mr Lee said Singapore is not operating in silos.

The world, he said, will continue to move forward, regardless of Singapore’s demographic and internal problems.

It is against this larger picture, he said, that Singapore has to define its path forward.

Mr Lee said: "It makes sense for the nation to maintain a sustainable and stable Singaporean population while we are still young, and while external conditions are favourable."

Mr Lee noted there are lessons to be learnt from the experiences of other countries.

The number of elderly citizens in Singapore aged 65 and above will increase considerably from around 340,000 in 2011 to 900,000 by 2030.

Mr Lee cited China’s rapidly ageing population to highlight issues which Singapore may face in the future.

He said: "China is beginning to see the "4—2—1" phenomenon: one child having to look after two parents and four grandparents. This inverted pyramid means a heavy burden for the children. When both parents and grandparents are retired, there is also the "aged caring for the aged" phenomenon and this is becoming common in our communities."

Echoing the sentiment, former Cabinet Minister Mah Bow Tan said Singapore cannot afford to lose its edge and become less competitive.

He urged Singaporeans to keep their hearts and minds open.

Mr Mah said: "We have spent a lot of our time looking inwards, talking about our discomforts, our space. We have not asked ourselves how we are going to compete with outside world. How we are going to earn a living to live the good life. It is almost taken from granted that the good life will continue even if growth slows. We expect new infrastructure to be rolled out, even as growth slows. We want more subsidies for health care and housing and let’s have less foreign workers and a slower pace of life. Where will the revenue from all this come from?"

Mr Mah, who is MP for Tampines GRC, said government revenue comes mostly from income taxes, consumption taxes and asset taxes, all of which are dependent on economic growth.

He added Singapore needs a bigger population with better educated and trained citizens as well as talented non—residents to supplement the home—grown talent.

— CNA/fa