It’s no secret that Singapore’s population is greying, but the country’s demographic landscape is about to face a critical tipping point as it heads into the new year.
As revealed by UOB economist Mr Francis Tan in research findings on Wednesday (Dec 6), in 2018, the share of the population that is above the age of 65 will match that of those younger than 15 for the first time in history, reported the Business Times.
And if Singapore continues to develop at the same rate, it will stack up against current day Japan – the oldest society in the world with 26.6% of its population above 65 years old- by 2030.
Mr Tan forecasts that by 2030, the number of seniors will make up more than double the share of Singapore’s youngest. The percentage of seniors will rise to 27%, while that of youths will fall to 10.8%.
Dubbing 2018 as the start of Singapore’s ticking “demographic time bomb” Mr Tan says that there will be several implications as the old start to crowd out the young – including changes to taxes, immigration rules and social services.
An increasingly aging population demands a heavier burden on sectors such as healthcare and social services. And as a result, Singapore’s primary budget deficit will widen.
“Not only will the increase in spending widen the budget deficit, the slowdown in economic contribution as more of the population drops out of the labour force will also reduce tax revenue for the government, resulting in a double whammy”.
To combat the growing budget deficit, Mr Tan explains that the government will have to look at other ways of raising its revenue, by actions such as raising taxes.
This simply reiterates Prime Minister Lee Hsien Loong’s sentiments earlier last month when he addressed the issue of raising taxes in Singapore and said that it’s “not a matter of whether, but when”.
According to Bloomberg, another suggestion Mr Tan provided was to increase the labor supply in Singapore by easing immigration restrictions.
But while the implications of Mr Tan’s research prove to be serious, he believes that the government still has enough time to curb the detriments of Singapore’s aging population, as long as it acts quickly.
He wrote: “The demographic time bomb only starts ticking in 2018 – it does not mean that it will explode yet”.