Take steps to ensure future generations' future can be brighter

I share Prime Minister Lee Hsien Loong's concerns about what slow economic growth of 1 per cent to 2 per cent annually can mean for Singaporeans ("A new gizmo doesn't mean one is going to work smarter"; Aug 3).

The biggest challenge, however, is how the slow economic growth would impact the younger and future generations.

The idea that each generation is better off than the last is a fundamental tenet of modern society.

Most advanced economies have fulfilled this promise, with living standards rising over recent generations, while in the developing world, the majority of people have started to experience sustained improvement in living standards and are rapidly developing similar growth expectations.

However, will future generations realise such expectations?

Singapore's policies have brought benefits to most people, but past growth is no guarantee that it can maintain the same trajectory.

First, the Government needs to continue to ensure the economic system is fundamentally fair, as this is key to political sustainability.

The state cannot take this for granted, as the interaction of disruptive technology and globalisation has exacerbated income and wealth inequality.

Second, our ageing population would pose a tough challenge, as the elderly are not only rapidly growing in numbers but are also living longer.

How would resources be allocated to care for the elderly in slow-growing economies?

Of course, the problem can be mitigated by easing restrictions on immigration and by encouraging more women and retirees to enter or stay in the workforce. But how long it will take for the Government to act is still an open question.

Since different age groups have different needs and productive capacities, our economic characteristic will likely change as our population ages. Will each future generation continue to enjoy a better quality of life than its predecessor?

For Singapore, the answer can be a yes, but the challenges will be formidable.

Slowing economic growth may also lead to high youth unemployment, leading to reduced consumer demand. There will be lost tax revenues even as there is a greater demand for more services such as healthcare.

Economic outcomes are passed across generations. Hence, economic hardships for the parents will mean more economic hurdles for their children. While deficits can plug the gap, the cost of doing so could result in passing the recession on to future generations.

Francis Cheng

A version of this article appeared in the print edition of The Straits Times on August 27, 2015, with the headline 'Take steps to ensure future generations' future can be brighter'. Print Edition | Subscribe