The size of working-age population is seen to start shrinking by 2020.
Back in the 1950s, Singaporeans could only expect to live less than 60 years but things have dramatically changed in the 20th century. Life expectancy rose to 85 years. Unfortunately, that’s not the whole story. Singapore is also having fewer children, which is creating a shift in the age of its working population. Increased life expectancy combined with declining birth rates is causing many to worry about the cost of an ageing population. We hear about fears that Singapore may soon have to deal with a catastrophic manpower crunch as working-age population is deteriorating in an alarming rate.
Nomura, in its latest study for instance note that one of the toughest challenges for Singapore is the pace at which its demographics are becoming less favourable. In the 2013 Population White Paper, based on prevailing birth rates and assuming no immigration from 2013, the citizen population was projected to peak in 2025 and then decline. Worse, the 20-64 working age citizen population (as a percentage of total) was shown to have already peaked in 2011 and by 2020 the absolute size of the working-age population would begin to shrink, bringing the old-age support ratio (i.e. number of citizens aged 20- 64 years for every citizen aged over 65 years) down to 3.6 in 2020 from 5.9 in 2012.
Given the trajectory of the city-state’s manpower, the economic benefit of immigration after five years of foreign labor restriction is again under the spot light. Immigrants are in general younger, and are seen by some as a way to fight against a growing ratio of retirees to workers. Nomura warns that unless policymakers reverse their foreign labour tightening, the dwindling labour supply would continue to strangle Singapore’s productivity by the neck.
“Assuming no relaxation in foreign labour policy, a higher share of older workers in the workforce has contributed to the lack of improvement in aggregate productivity growth in the last few years, and that share is likely to rise over the medium term,” Nomura said.
Does Singapore’s falling productivity warrants a revisit of Singapore’s foreign labor policy?
Singapore Business Review asked several experts to shed light on the issue and here’s what they had to say:
Adrian Tan, Coach, CareerLadder Singapore
I don’t think reversing the foreign labour policy would be possible political or societally. The only thing they could do it to encourage businesses to do a mindset shift and embrace the other talent pools which traditionally isn’t high on their radar (elder, ex-offenders, mothers, etc)
But purely lip service might not be enough. There had been many case studies, awards, campaigns, advertisements but employers are not listening. They are still hiring the youngest, cheapest talents they can find. With zero awareness that cheaper upfront doesn’t mean cheaper in the long run.
And there are many prejudice against talent pools they are currently not considering such as them being too slow, too old to learn new things, cannot gel into their young culture, cannot report to a younger boss, etc.
Instead of doubling down on communication efforts, my personal suggestion is for government (or accurately NTUC) to open new businesses in this space under the co-op mode. Openly embrace the alternate talent pools and compete against the other players in the open market.
Show them it can be done and it will make them more competitive. Employers will only learn and react when the pinch on their arm turn blue-black.
Michael Podolinsky CSP, CSPGlobal, Asia's Productivity Guru & CEO-Podolinsky International Pte Ltd
[I believe that what is happening] is partially an environment crunch, not labour crunch. Singapore schools are #1 in the world in both maths and science, turning out world-class students. Many of our best and brightest graduate high school / JC to leave Singapore and study overseas where they first experience the allure of an ‘open’ environment (big house, fast new car(s), perceived 'freedom' to do or go anywhere, anytime and don’t return.
If you were 21, would you rather get a job overseas and own your own car (while going to school) and your own home 2 years after graduation OR return to Singapore to live with parents for another 8 -10 years, taking the bus to work?
[To attract younger generations in Singapore to get a job here instead of working overseas, I suggest the following:]
• Create loft spaces in warehouses for young people to live, work and study.
• Fresh graduate rent-to-own and black and white sharing schemes
• Give fresh grads a 5 year COE for $10k on a car being scrapped.
[One of the consequences of ageing workforce is that] older workers were trained for jobs which don’t exist now. Many didn’t worry about retraining as Retirement age was 55... then 62.5, 65, soon 68. Singaporeans live to 82.5 today. Most people cannot afford 27.5 years without income.
[To address this, I suggest the following:]
First is the Oman Solution. Most don’t want to drive a bus or take lower pay jobs. Oman mandated all bus and taxi drivers had to be Omanis. They raised pay scales for these jobs. Now Omanis are proud to drive a taxi or a bus. The bus rider pays 10 cents more a ride, but if you ask the bus captain a question, they can answer AND they know the location you want to go to.
Secondly, at the last 5 years of work, employers should pair older workers with younger worker who has the skills needed. By doing so, the older workers are able to teach managerial, team, interpersonal skills in exchange for new knowledge.
Lastly, employers may also implement job sharing so each technically only works 4 to 6 hours a day.
With regards the people imported, it’s wise to train them to do multiple jobs so we don’t need to import so many.
Jeremy Han, Director of Corporate Strategy for the Adam Khoo Learning Technologies Group; coach, Gazelles International Business Strategy.
There should be cognizance that the manpower crunch due to ageing population is not a phenomenon happening in isolation i.e. there are other macro trends that could mitigate it. The other trend of the 21st century is exponential disruptions. That means that norms are being disrupted to either create exponentially positive or negative results. So government, business and academia should start by re-looking at what assumptions are they holding on to equate ageing population to a manpower crunch? And what trends could counteract that.
One assumption is that growth is linear i.e. x resources input = x % growth. But business gurus like Liz Wiseman and Jeff Sutherland have studied organisations that achieved exponential results with no corresponding addition in manpower because they challenged the linear assumption; they adopted exponential assumptions and practices to grow beyond conventional limitations imposed on limited manpower. Their research proves that the collective resources of an organisation can be multiplied and harnessed for exponential results beyond traditional means. So the first step the government can take is to re-think its assumptions and re-evaluate its options in an exponential era. We need new ideas for a new era.
Reversing foreign labor tightening, to me, should be a sectoral question rather than a national one. This is because different industries have different needs, and Singapore does not provide manpower adequately across all sectors, thus policy makers could adopt an industry specific approach rather than a blanket policy. That, however is not to say that industries dependant on foreign labor do not strive towards greater non-human driven productivity, but policy must take a graduated approach so that these businesses do not get ‘starved’ to death by a sudden forced diet.
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