The Straits Times says

Facing up to looming labour shortfall

Office crowd in Singapore's Central Business District (CBD). PHOTO: ST FILE

Among Asian nations, Singapore's labour force is expected to be the worst hit by ageing and low birth rates over the next two decades, according to a recent study. Drawing more women and seniors into the workforce is expected to only marginally limit the negative impact.

In the past, foreign labour inputs helped to give the economy a boost. Greater reliance is now being placed on innovation and technology - both to become more competitive and to help make up for some of the labour shortfall. Making that plain last week, Second Minister for Manpower Josephine Teo said that the imminent slowdown in workforce growth is indeed a key factor in Singapore's embrace of technological solutions.

But Singaporeans should not wait till the limits of these are reached to ponder a future marked by a grim shortage of labour. That would affect not just economic growth but also the provision of prompt and affordable daily services. Preparations need to start now. And that is because labour shortfall is not a problem of numbers alone. It is a political challenge best met by getting people to understand the complex trade-offs involved. Both time and effort are needed to find a workable balance between goals that pull in different directions at times - economic growth, worker protection and social cohesion.

The national conversation on long-term demographic trends, however, has stalled in recent years, after a public backlash against the Government's Population White Paper of 2013. The discussion needs to be restarted. It will take candour and courage to do so, but it needs to be done. The pace at which Singapore's labour force is set to shrink is worrying: 1.7 per cent through to 2026, and 2.5 per cent in the decade after. Oxford Economics projects that every 1 percentage point decline in workforce growth clips GDP growth by 0.5 to 0.67 per cent. Across the region, Asia's fast- ageing populations will be a drag on growth, the International Monetary Fund has warned. It urged policymakers to step up their responses to changing demographics.

To meet this looming crisis, countries must keep all policy options on the table, including automation and foreign labour. It would be a disaster if politics causes a nation to shut off either option. The onus will be on its leaders to forge consensus through policy calibration, negotiation and persuasion. An ageing society need not be in inevitable decline. More can be done to help seniors who are fit and able to extend their working lives beyond 67. The demographic trend can also give rise to a bustling "silver economy", in which seniors participate as both producers and consumers. But caring for the aged is labour intensive and the resident workforce alone will not be able to fully meet needs. Hence the need to remain open to all workers, including those from abroad.

A version of this article appeared in the print edition of The Straits Times on September 20, 2017, with the headline 'Facing up to looming labour shortfall'. Subscribe