Economists fear that Singapore’s aging population will have a negative impact on the country as early as 2018. The population, for the first time ever, will have the same number of elderly people as young people next year.
The country’s population over 65 will be the same as those who are under 15.
The report estimates that the threshold will have a negative impact on everything, from the country’s defense to their economy. The report notes that there will be a rise in dependency with almost a 1:1 ratio, by 2030, where adults to dependents will be met.
Economic ramifications include rising healthcare costs that will have to compensate for an aging and ailing population. The economy will stall, according to the report, due to a lack of workers needed to fill the country’s vital positions.
Singapore’s economy is stuck at a standstill, with many economists suggesting that the country will be impacted much in the same way as Japan has been thanks to an aging population. The rising, aging population is making it difficult for Singapore to push through new policies that now must considered the country’s aging population as well as the well-being of young residents.
Economists are trying to find ways to offset the impact the older population is having in the country. One solution would be to ease immigration restrictions.
“Since 2009, Singapore has cut down the number of approved Permanent Resident applications by 50%, ” states Immigration Solutions.
The county is being urged to ease the restrictions on immigration, but must avoid the issue with foreigner assimilation, which has already become an issue.
Immigration easing is suggested as a way to help Singapore maintain its labor supply as more of the elderly leave the economy.
Singapore is expected to increase their goods and services tax (GST), with economists forecasting a rise from 7% to 8% and an additional rate hike in 2019 to 9%. Singapore’s rising population won’t have an immediate impact in 2018 thanks to a large percentage of the working population still working.
The report, however, notes that the trend cannot be sustained over the long-term.
UOB economist Mr. Francis Tan forecasts the country’s population of seniors to double the youngest share of the population. He suggests that the percentage of youths will fall to 10.8%, with the percentage of seniors rising to 27%. Japan’s economy now sits with 26% of their population being elderly.
Japan has implemented a long-term-care insurance plan that helped supplement the national pension plan. The insurance plan has undergone several reforms to better help accommodate the elderly.
The country’s primary budget deficit is expected to rise as social services and healthcare costs increase. Tax revenue is expected to fall as more of the elderly choose to retire and stop contributing to the country’s economy.
Prime Minister Lee Hsien Loong stated earlier in the month that Singapore will need to increase taxes soon. Loong says that “it’s not a matter of whether, but when.”
Mr. Tan states that the country’s issue isn’t without resolution. He claims that the “time bomb” will begin ticking in 2018, but states that the government has enough time to correct the issue.