The Singapore An Aging Population Economics Essay
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Published: Mon, 5 Dec 2016
Ageing is the accumulation of physical, physiological and social changes in a person over time. It is a phenomenon that every individual is bound to experience. Therefore, it is only natural for one to hope to live in a society that respects, supports and caters to various needs of the elderly.
Today, governments around the world are facing the tough challenge of providing adequate healthcare and housing for the elderly. Due to the possible ineffective allocation of funds or the lack of concern for its elderly citizens by the government, there is a possibility that a large proportion of the aged are neglected and are left scrounging for basic necessities while struggling with myriad health issues associated with age.
Singapore currently has one of the fastest growing economies in the world. However, it also has an extremely low birth rate and an appallingly high rate of ageing. Approximately 10% of the population of 5 million is aged over 65. This figure will increase to about 25% by the year 2020. With such shocking statistics, many questions come to mind. A young man may worry about how he will find the means to support his elderly parents as well as his own family. A woman close to retirement may be concerned about her future and wonder whether she would have to perform menial jobs to make ends meet.
It is the duty of any government to give priority to the needs and demands of its citizens and take steps to address them. Thus, Singapore’s Government has to formulate policies that address the possible problems of an aging population and take preventive measures to counter the same.
Before attempting to solve the problems of Singapore’s aging population, it is critical to identify the stakeholders involved. By studying the effects of an ageing population on these stakeholders, the potentially negative effects of this issue can be mitigated, and future problems can be anticipated. Especially with the ever-changing social demographics and economic conditions, the inter-connectedness of the pressure which an aging population would exert on our country as a whole should not be underestimated, especially during the phase when identified secondary social stakeholders transit to primary social stakeholders.
Primary stakeholders include:
1) Senior citizens
Senior citizens are the very group of people to experience the most impact as their well-being is at stake.
General concerns for these group of stakeholders include:
Would the future generations be able to support the increasing proportion of senior citizens?
Are infrastructure and public services elderly-friendly?
Will the Singapore Government introduce more schemes and policies aimed at improving the situation?
2) Working Singaporeans
As an ageing population increases demand for healthcare and other services, the financial pressure on Singaporeans rises too as the taxes they contribute to support these services increases. This decreases the income they bring home and directly affects their spending power.
3) Singapore Government
With a shrinking workforce, a drop in the economic growth rate is inevitable. The government is responsible for the introduction of suitable policies to contain the situation. Besides, the government has to ensure that Singaporeans adopt an optimistic view on the matter and create nation-wide awareness on the impacts of an ageing population.
Secondary stakeholders include:
1) Future generations
Currently, the implications of an ageing population have yet to fully present themselves and the Singapore Government is absorbing most of the effects at current situation. However, if statistical studies prove right and the proportion of senior citizens to working Singaporeans increases, the effects would be more severe and Singaporeans would have to share the burden of supporting the ageing population in later years. Therefore, our future generations will also face the same negative effects of the ageing population that current Singaporeans face.
As Singapore’s population is growing older, there will be a relatively fewer number of people in the working sector. Businesses and organisations will be affected by the lack of young and skilled workers. As a result, additional funds may have to be spent on trainings to help the older workers master new skills. Furthermore, due to higher taxes burden on households, purchasing power of individuals will decrease significantly. This will eventually affect the growth of businesses.
The secondary stakeholders neither directly affected nor involved in the problem. Future generations have yet to be affected by the problem of ageing. When the situation worsens in future, our descendants will have to support their elders and will also be affected by higher taxes. They will subsequently become primary stakeholders.
As we can see, large sections of the society are affected by this issue and will continue to be affected by the continuous increase of ageing population. Hence, immediate steps have to be taken in order to minimize the damages caused by this issue.
Figure 1 (insert)
The Implications Of An Aging Population
Singapore has one of the highest proportions of elderly citizens in the world, and second only to Japan in South East Asia.
(Suan Ee Ong, 2010).
The Declining Standards of an Individuals Health
Research suggests that as individuals age, they are increasingly prone to numerous health risks. The risk of malnutrition heightens with age with 3 in 10 elderly at high risk. (http://www.asicluster3.com/blog_self/index.php?page=viewentry&id=133) As a person ages, problems like diabetes or parkinson’s sets in, along with dietary restrictions. One can also expect an overall deteriorating quality of physical health. For instance, psychomotor skills deteriorate, resulting in stifled physical independence. Osteoporosis, a disease in which causes the bones to become less dense affects large numbers of our elderly. Additionally, mental health starts deteriorating with the onset of illnesses like dementia and depression.
As one ages, quality of health will undoubtedly follows a downward trend. Coupled with an increasing number of citizens aged 65 and above. this leads to a decrease in the standard of health over a period of time.
This would in turn give rise to new industries and businesses revolving around health care, with niche specialisations in care for the aged.
It is important for the society to provide services that target the aged. Moreover, the World Health Organization (WHO) has stated that not all of the aged will be in need of health care services if society helped them lead an active lifestyle. Therefore, the population growth forecasted in future years, urban economic countries will lack the appeal to attract immigrants. (Kresl, Peter Karl & Letri, Daniele (2010)) Being a small country with low birth rate, Singapore may face some challenges in attracting foreign talent to our city in future. Therefore, our society may face difficulties in employing a sufficiently skilled workforce to maximise output.
Effects On Future Generations
As the population ages, there will be an increasing demand for goods and services in the healthcare sector. A government’s duty is to serve its people, and society as a whole would expect basic health care services to be provided. Consequently, there will be increased pressure on the government to provide for health care. Monetary costs would be incurred and would be passed on to society in the form of increased taxes. With the dismal birth rates we see today (1.22 births per woman in 2011, down from 1.83 in 1990), tax burdens on future generations (who will then become primary social stakeholders) will only increase as time goes by. (Department of Statistics Singapore. (2012))
There is an inverse relationship between the dependency ratio (percentage of the population who are too old or too young to work) and birth rate of a country. Naturally, an increasing dependency ratio can be attributed to a declining birth rate. If the birth rate continues to stagnate or drop, the dependency ratio would only increase at a faster rate in the future. This translates into a heavier burden on the working population to maintain economic growth and to provide for dependent citizens.
The Reverence of The Silver Generation to Society
It is evident that the elderly exert a major influence on our social fabric. They carry with them the cultures, traditions and values that make our country what it is today. The hard work and time that they put in to raise educated, motivated and refined citizens of this generation is the reason why our country has reached this level of success. As the saying goes, with time comes wisdom. Therefore, the silver generation is much revered, and as per asian cultures, due respect and care should be given to them. As the elderly before us have served the country by contributing to it in various aspects, Singapore’s government should have a sense of filial piety to them. Since the government is a primary social stakeholder involved in the issue of an ageing population, it has introduced many government initiatives to solve arising problems.
To handle the implications of an aging population, we should seek to improve elderly standards of living and encourage them to contribute to society even at an age past retirement. The government should also take up initiatives to help senior citizens fit in and continue to be part of the workforce even at a ripe old age.
Due to the rapid growth of an ageing population, there are certain issues that may arise.
Productivity Issues In Organisations
A large proportion of senior citizens in a population indicates a decline in size of a productive workforce. According to the UN’s latest biennial population forecast, the median age for all countries will rise from 29 to 38 years by 2050. (SOURCE) We may safely assume that the dependency ratio will increase dramatically over the next few decades.
Organizations looking to expand productivity would be reluctant to hire older workers. Those following a profit maximising model opine that it would be more cost efficient to hire younger workers due to their higher productivity. Additionally, during periods of recession, more often than not, older workers are among the top few in the retrenchment list. However, this contrasts the fact that older workers bring with them a plethora of experience and wisdom, which can only be gained over time. Despite cost inefficiency, it is unfair to be against the notion of hiring of older workers.
Singapore’s government foresaw these issues and implemented new legislations to curb age discrimination at the workplace. As of 1 Jan 2012, under the Retirement and Re-employment Act (RRA), the statutory retirement age was set at 62, and companies have to offer re-employment contracts to workers up to the age of 65.
With these new initiatives, it can be seen that the government is indirectly engaging all business organisations through legislation. These businesses, which were once secondary social stakeholders, are now evolving into primary social stakeholders in this issue of an aging population.
Increase In Demand For Health Care & Elderly-Specific Facilities
Many countries, including Singapore, have been working towards providing better care, not just in clinics and hospitals, but also within the community and at home. To enhance accessibility for the elderly, the government has taken up many initiatives and projects to improve living conditions for the elderly.
For example, the Enhancement for Active Seniors (EASE) programme implemented by Singapore government introduced slip-resistant bathrooms and even installed grab bars within flats. Other projects include life upgradation, building of barrier-free features such as ramps and the levelling of steps .
In order to provide a more accessible healthcare services, the Singapore government has given more emphasis on home and community-based services, which include the expansion of social rehabilitative care places . More subsidies have also been introduced to support the poor and those from middle-income families.
The growing ageing population has resulted in the growing demand for facilities and the expansion of subsidies which is putting great pressure on government. Government spending on health care is estimated to increase even further in the future as more money is required to support new initiatives and expansion of the existing initiatives. There is also a need to hire more health professionals, for which more resources and funds are required. As a result, the allocation of the budget towards healthcare is expected to rise as related spending would increase to about twice by 2030.
Government policies not only have a positive impact on the lives of the elderly, but may also have a negative impact on businesses. Business owners may feel restricted by such employment policies and may decide to move out of Singapore. They may also stop supporting the government in the elections .
The government relies heavily on taxes from small and large businesses for its sources of revenue. If these businesses were to change location or move out of Singapore due to restrictive policies, revenues would fall. A drop in revenue would mean that the government has less to spend on other facilities for its people.
Furthermore, relocation of businesses would result in widespread loss of local jobs. The result is a higher dependency ratio, higher unemployment rate, less revenue for the government and the slowing down of the economy.
Thus, the government should ensure that any policy related to ageing does not anger or upset the sentiments of various businesses and should keep in mind what is at stake.
Let us consider the repercussive chain of effects of aging population. Firstly the number of people in the workforce would drop, with a corresponding increase in the dependency ratio. This translates into a drop in output /productivity of individual businesses and the economy as a whole. As Singapore’s GDP is very dependant on both our import/export sectors and consumerism this could cause Singapore’s economy to go into a slowdown. One might argue that there would be an increase in the growth due to the consumption of more healthcare. However the drops in productivity would be greater than the increase in consumption of healthcare. Eventually, there will be an increased burden on the current workforce to maintain economic growth. Finally, if nothing is done, a vicious cycle commences, and future generations would find it increasingly difficult to provide for the previous generations and support the economy.
(Picture – Singapore’s indicator of ageing)
Actions Taken By Singapore’s Government
Singapore’s government recognises that the increase in the ageing population will lead to several consequences that will affect all sections of society, as well as the economy of the country. Hence, in order to support the older population, the government has put in place various policies and introduced new schemes.
In 2004, the government set up the Committee on Aging Issues. This committee comprised of private and government representatives who came together to discuss issues related to ageing. The recommendations for solutions related to these issues were presented in a report and were passed for implementation. They aimed at enhancing employability, improving healthcare facilities, promoting active lifestyles and financial independence.
The government also aims at establishing concrete facts about our population and conducts frequent surveys to gauge the physical and mental health of seniors. It also identifies areas to improve the wellbeing of its citizens.
As seen from Figure 1 (Singapore: Indicators of Ageing), the proportion of Singaporeans aged 65 and above will significantly rise in the coming years. Hence, there is a need for the government to introduce schemes that provide adequate housing that caters to the needs of elderly such as their health, mobility and security, which is of utmost importance.
Some schemes that the government introduced were the Multi-Generation Flats in 1987 and Granny Flats in 1991. However, they were not very well received. A more successful initiative was the implementation of Project LIFE ( Lift Improvement and Facilities Enhancement for Elderly). (Reference: http://asiaforum.tsaofoundation.org/pdfDownloads/Day1/D1_plenary/plenarySession_1/Housing%20developments%20for%20ageing%20population%20in%20Spore%20-%20yap%20chin%20beng.pdf) This proposal aims at creating lifts in Housing Development Board (HDB) flats so that every floor is serviced, for the convenience of the elderly and the handicapped. The government expects complete adoption of this plan in all HDB flats by 2014.
In addition, integrated studio apartments were also incorporated into each housing block and came with spaces for social and communal gatherings.
In the year 2011, the government introduced the idea of barrier-free housing environments which involved the building of handicap ramps and pathways to facilitate easy movement of wheelchairs.
Therefore, continuous modification of housing landscapes aims at meeting the needs of citizens and to provide a comfortable shelter for each and every senior citizen.
Public transport has also seen improvements and is somewhat more ‘elder-friendly’. In 2006, MRT stations were modified and made barrier free. Today, approximately forty percent of our buses are wheelchair accessible.
3. Encouraging re-employment
Due to the negative impacts of ageing population on the workforce productivity, the government has seen the importance to tackle on this problem so as to sustain economic growth. Hence, the 2005 appointment of a Tripartite Committee (government, employers and trade union) on Employability of Older Workers by the Minister for Manpower addressed the issue by implementing several measures (Thang, L. (2011)).
One of the measures is the the enactment of Retirement and Re-Employment Act (RRA) which was put into effect on 1 Jan 2012. The Tripartite Committee formed the Tripartite Implementation Workgroup to help employers carry out this initiative.
In October 2007, the Tripartite Implementation Workgroup formed by the Tripartite Committee was to assist companies in the implementation of the re-employment measures. In order to further encourage the implementation of re-employment schemes for older workers, companies were given financial support of up to $400,000 for policies that were placed in line with the re-employment legislation. Workforce Development Agency also subsidized the re-training programmes that were put in place by employers. in addition, Continuing Education and Training (CET) master plan was launched in 2008 by the Ministry of Manpower to provide trainings for employees so that they will be equipped with skills that keep up with the pace of the fast-growing industries.
While the government attempts to encourage re-employment of older workers, they have to ensure that younger employees and employers are willing to accept them. This is because older workers are generally perceived as unproductive and inflexible. Hence, measures have been put in place foster an age-friendly working environment. This is done by introducing national awards to acknowledge companies with the most progressive and unbiased practices. The Tripartite Alliance for Fair Employment Practices (TAFEP) has also put in place many guidelines to advocate on fairness and to discourage discrimination of the old-aged employees. (Thang, L. (2011))
Hence, by encouraging the older employees to continue working, and by changing mindsets to accept older workers, Singapore’s workforce and output can be maintained at the current level of integrity.
The Tripartite Implementation Workgroup was a relative success as by February 2009, 706 unionized companies have committed to re employment while 4650 workers over age 62 were re-employed by the end of 2008. (Thang, L. (2011))
4. Ensuring financial stability for the aged
Due to the decreasing fertility rate in Singapore, there will be a heavier financial burden on the future generations, and it is possible that the older generation may not be financially independent. The Workfare Income Supplement (WIS) Scheme was introduced in 2007 to ensure that Singaporeans will have sufficient savings for their retirement. This scheme encourages the older workers who are earning low-paying salary to continue working so that they can accumulate more CPF savings. In order to supplement higher take-home pay and reduced CPF rates, the Government began to give elderly workers part of the WIS in cash so that they can afford for their basic needs. (Reference:http://mycpf.cpf.gov.sg/Members/Gen-Info/Workfare.html)
Furthermore, due to the increase in life expectancy, the government plans to increase the Minimum Sum Draw-Down age from 62 to 65 by the year 2018. There were also plans to introduce a longevity insurance scheme. This will ensure that CPF members can be assured of a basic income as long as they live. (Reference:http://app1.mcys.gov.sg/Portals/0/Summary/pressroom/03-2008.pdf)
In face of the current trend that can be observed in Singapore, it is essential that healthcare services are improved to cater to the needs of the older population. Thus, the Ministry of Health introduced a Chronic Disease Management Programme which empowered physicians to adopt a holistic approach in the treatment of diseases. Furthermore, the ElderShield Scheme for the disabled was enhanced in 2007 to help increase affordability of medical services by paying $400 per month for up to 6 years. There was a 60% improvement from the previous scheme.
In addition, the Ministry of Community Development, Youth and Sports (MCYS) and the Ministry of Health (MOH) are also conducting a review of eldercare services aimed at bettering facilities such as daycare centres, rehabilitation centres and home help services .
The concept of active ageing was developed by the European Commission in 2002. It brings forward the idea of higher retirement age and longer period of activity in the workforce. It has been proven that leading an active and directional life improves the overall well-being of an individual and helps keep illnesses and diseases at bay. Active ageing was introduced by the Singapore government in order to ensure self sufficiency of citizens after retirement. It established the Council for Third Age(C3A) in May 2007 to promote active ageing and fund community-based events related to active ageing.
In addition, due to the increase in degenerative diseases that require expensive treatment, the concept of active ageing is gaining more importance. It is said that the cost of treatment for the older generation will cost two to three times more than that needed for the younger population.
What Does the Future Hold?
Our population is ageing at a rate faster than in countries such as Australia, South Korea, UK and the USA. (ref – first article in dropbox) . The number of citizens aged 65 and above will show a sevenfold increase by the year 2050. So what does this mean for our future?
Firstly, our country will be more prone to external invasion. Presence of an ageing population is an indicator that our defense is weakening. We will have fewer young people to fill the ranks of the army, and fewer physically fit citizens to defend us in times of need. Our future and survival will be threatened.
Secondly, economic growth will slow down. Singapore will no longer be seen as a hub of young, talented and competitive individuals by global MNCs. They may no longer want to invest and set up their offices here. Furthermore, with fewer individuals to pay income taxes, the government will have less money to spend on healthcare, infrastructure,etc. As a result, taxes will increase, leaving people less to spend on themselves and their family.
The demand for healthcare services will rise, but will not be sufficiently subsidised by a government which does not have enough resources.
Singapore is at the brink of entering a vicious cycle . If immediate short-term and long-term measures are not taken, we are bound to find ourselves moving backwards and reaching a rate of growth similar to what we had many decades ago.
1. Enhancing senior citizens’ value in the organization through empowerment
In line with the re-employment policies the government has in place, we suggest that organizations create appointments and titles specially aimed at empowering senior citizens. They should ensure that these creations are aligned with the capabilities of these senior citizens.
Likewise, existing positions should be modified according to their capabilities. The purpose of this is to enhance their value and well-being in the workplace where they are often regarded as liabilities more than assets.
With such initiatives, senior citizens will be able to perform better, with more flexibility and recognition within the organization. This also widens the operating structure of organizations, allowing for more variety of specialization.
At the same time, organizations could tap into their experience and expertise, especially for crisis management and advisory roles. Even within the Singapore Cabinet, forefather Lee Kuan Yew is still actively involved in local politics at the age of 89 and the titles “Minister Mentor” and “Senior Minister” were specially created to continuously empower him.
2. Continuous active promotion of healthy aging from small communities
Presently, Senior Citizens’ Executive Committees (SCECs) under the People’s Association (PA), the largest senior citizens’ network in Singapore, organizes a wide variety of activities and courses aimed at enhancing senior citizens’ life experiences. They are usually conducted at a national level, and seldom reach out to the smaller communities.
The government could engage Resident Committees (RCs) and Community Centres (CCs) in neighbourhoods to aid in promoting healthy aging. Subsidised or sponsored activities could be one alternative to attract senior citizens to actively exercise healthy aging. Constant awareness can be achieved through newsletters and pamphlets mailed to letterboxes.
3. Strengthening family ties
It is important for our society to realise the value and importance of senior citizens. They should not be viewed as burdens; instead they should be seen as extraordinary citizens who brought us as well as our country to the position we are in today. Hence, it is expected that we, the younger generation, give them the deserved care and respect without any ulterior motive in mind.
We feel that the indoctrination of these strong values should begin at a young age. Special programmes should be introduced into schools in order to promote togetherness within the family. Children should be educated about the importance of elders in society and should be taught to always show them respect and kindness. The media can also play a role an important in this process by occasionally publishing articles that portray the elderly in a good light.
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