According to World Bank data, Singapore has the highest proportion of older residents and the fastest ageing population in South-east Asia.
With the highest median ages, the longest life expectancy rates and one of the lowest fertility rates in the region, Singapore is already facing the immediate challenges of declining populations and talent shortages.
At current birth rates and without immigration, Singapore’s citizen population will age and shrink. Between 2011 and 2030, the median age of the citizen population will rise from 39 years to 47 years.
Working beyond 62
Currently, the retirement age is at 62. But the real issue is that most Singaporeans may have to work until they are 67 or 70 years old.
This is primarily due to the fact that with the climbing costs of living (especially health-care costs) and greater life expectancies, fewer Singaporeans can afford to stop working. On the positive side, delaying retirement is often viewed as the surest route to better financial security in old age.
By working longer and earning more, older workers can boost savings, and shrink the period their retirement savings must fund. Employment at older ages also expands the nation’s labour pool, accelerating productivity, increasing national income, and raising living standards for both workers and retirees.
However, if more old or mature employees are not able to work due to forced retirement, middle-aged and younger people will have to subsidise this growing segment of society.
According to a paper published by the National Population and Talent Division of the Prime Minister’s Office (PMO), Singapore will also find itself in the unprecedented position of having a declining number of citizens of working age (that is, those aged 20 to 64) from 2020 onwards.
As more Singaporeans retire and fewer young Singaporeans enter the workforce, the country’s citizen workforce will start to shrink. This will have implications on its economic growth.
Productivity growth measures the growth in output produced by each worker. Productivity growth is driven by two main factors: capital and innovation.
A rapidly ageing workforce, if not managed well, may lead to a lower level of innovation. Evidence from high-income OECD countries suggests that the median age of the population is negatively correlated with total factor productivity, a measure of productivity growth associated with higher innovation and improving technology.
If the ageing population in Singapore not only leads to a shrinking workforce but also results in lower innovation, it will become even more difficult for the nation to support productivity and economic growth.
It is thus important that the right government policies are put in place to allow Singapore to leverage on its older workers by, first, investing in more elder-friendly technology; second, encouraging continuing education and training; and finally, encouraging its younger workforce to tap the wealth of experience of older workers.
An ageing population will impact Singapore businesses as well. Yet, to date, most companies have been slow to respond. From observations and discussions with various stakeholders, few companies have formalised strategies that take into account the ageing of the population, either in terms of their customer base or employee base.
Only a select number of companies have recognised that as the percentage of younger workers declines, older employees represent a more important component of the workforce than ever before. They are therefore introducing policies and programmes to reflect this and retain these older workers.
This shift in the population structure has enormous implications for governments, non-governmental organisations, businesses as well as for the older people themselves. While this global phenomenon has long been recognised and discussed, governments around the world are really only just beginning to respond to the challenges.
Singapore will have to face the various strategic challenges posed by an ageing workforce. However if all stakeholders (employers, workers and Government) are able to collaborate effectively, these perceived challenges can indeed be overcome and its economic growth and national competitiveness can be sustained.
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Article by Professor Sattar Bawany, chief executive officer and master executive coach of the Centre for Executive Education (CEE Global). CEE offers human capital management solutions, including talent management and executive development programmes. For further information, visit www.cee-global.com or e-mail firstname.lastname@example.org