Several things in the Population White Paper annoy me. Many of them are in the form of unexamined assumptions. The purpose of this article is to take a closer look at one of them.
I feel it is important to take the White Paper apart element by element. As it is, the outrage we see in social media is over the top-line figure of 6.9 million on this island by 2030. However, unless we pick apart the assumptions that the White paper uses, we can’t analytically say what’s so flawed about the 6.9 figure; we can only say we don’t want it.
The element I wish to examine in this essay is the old-age dependency ratio.
Page 13 of the White Paper contains this graphic:
It’s trying to tell us that currently we have 5.9 citizens of working age (20 – 64 years) for every citizen aged 65 and above. By 2030, it is projected that there will only be 2.1 citizens of working age for every senior citizen. The burden on the working adult in trying to support older folks will be three times heavier.
This projection is used as a scare tactic to soften up the reader’s opposition to immigration. It aims to say that if we don’t agree to more immigration, we will go broke trying to support old folks.
Because I thought the statistic is poorly presented — not that I am saying it is wrong — I came up with a better graphical way to show you the situation. But first, I had to trawl through the Department of Statistics and Ministry of Manpower websites to get the source data. Another annoying thing about the White Paper is that it had no statistical appendix to support its graphs — almost like it had something to hide.
I found a table of Resident Population by Age Group in http://www.singstat.gov.sg/pubn/popn/population2012b.pdf. It gave figures for June 2012. Unfortunately, it lumped citizens and Permanent Residents together and there is no way I can tease out citizens alone, in order to match the graphic shown above.
I also found a table for labour force participation rate at http://www.mom.gov.sg/Documents/statistics-publications/Statistical-Charts/mrsd_AgeSpecificResLFParticiRate_Ct_310113.pdf. It too gave June 2012 figures for citizens and Permanent Residents lumped together. There were separate figures for males and females, but for my purposes, I averaged them together otherwise this exercise would be hopelessly complicated.
The result of this search is Table 1 below, which shows you cohort by cohort how many are working and how many are not.
To check that my calculations aren’t too far off reality, I compared the total number of working residents that I obtained (2.149 million) with the total number in the labour force as published by the Ministry of Manpower (2.119 million), which you can see at http://www.mom.gov.sg/statistics-publications/national-labour-market-information/statistics/Pages/labourforce.aspx
It’s not a perfect match, but close enough. Rounding errors probably caused the difference.
I then drew a graph to represent the above data. In Figure 1, the lighter blue represents the non-working persons, the darker blue the working ones:
Certain features will strike you about the graph
- About one in eight late-teens are already working; not in school, not under training.
- In the prime years of 25 – 45, over 85 percent of each cohort is working (or looking for work). In my view, this is too high, which I will explain later.
- After age 60, the bars shorten rapidly. This is not because people are dying off quickly, but because there were just fewer of them born during their time.
The third point is what makes the low old-age dependency ratio. There is indeed a lot of dark blue (i.e. working people) compared to senior age light blue.
Twenty years later
Based on the above graph, I can roughly sketch one for twenty years later. I just move each light blue bar twenty years to the right. Because I can’t be too sure how many of the older ones will die off or how many new babies will be born, the two ends of the time-shifted graph are fuzzy. Figure 2 shows you what the Resident population in 2032 may look like if we do not take in lots more naturalised citizens or Permanent Residents.
From this graph, you can see that in this future, we will have many more older folks to support.
In other words, this graph supports the Population White Paper’s warning that by 2030 there will only be 2.1 adults of working age for every senior citizen.
Looking at the problem differently
However, before we turn white in the face, terrified of the future, we might want to ask ourselves: In a demographically healthy society, what should the graph look like? What kind of old-age dependency ratio results?
Wait a minute — what is a “demographically healthy” society?
Well, it is a sort of idealised society that has a stable population from generation to generation; it is sustainable. It is not lumpy and schizoid like Singapore’s population, bursting upwards in one generation followed by a baby-bust in the next. This stable-state society will be like this:
I need to explain a few assumptions I have used in Table 3 above.
- No teenagers work. In fact, only a minority of early-twenties work. In a future society, they will need to stay in school or be under apprenticeship longer.
- Even in their prime years, only 80 percent of adults work, unlike the present peak of 88-90%. I think it is unhealthy that so many adults are in the formal work sector, because it means that not enough are devoting time to child-raising — thus our present baby-bust. A stable-state, healthy-demography society will need more adults as home-makers.
- I assume an average life expectancy of 85 years.
- I have matched the total population of 3.8 million to something similar to the existing total population of citizens and Permanent Residents in 2012/3.
Table 3 produces a graph that looks like Figure 3 below:
The old-age dependency ratio in this idealised society is 2.25. There are 2.025 million persons in the working age range of 20 to 64 years compared to 900,000 persons aged 65 and older. You can check the calculation from Table 3 yourself.
What does this tell us? It tells us that there is something wrong with the White Paper’s interpretation of good and bad. Our idealised ratio of 2.25, which is compatible with a demographically healthy society, is a lot closer to their “shock-horror” 2.1 than to the current 5.9, let alone the nostalgic 13.5 of 1970.
In other words, 5.9 is not sustainable. It comes about only as a result of a “demographic sweet spot” — when a baby boom generation moves into working age. Alternatively, it’s the result of heavy immigration of working-age adults — ruthless population engineering. It is not sustainable in either case because both imply relentless increases in population.
We’ve got to learn to live with 2.25.
This thought experiment shows that if we’re going to be at peace with ourselves, we’ll need social safety nets compatible with a dependency ratio of 2.25. The future is only scary because our government has refused to countenance a better social safety net.
Another simple way to deal with the ratios coming out of such a healthy-demography scenario is to have people working longer. Figure 4 is obvious:
I know what many of my readers will say about pushing retirement age till later: it’s impossible! Cannot be done! Political suicide!
But let me share with you some small insight from my own long life: When my grandmothers were my age today, they were beginning to slide into senility and ill health, but my parents were still economically active at the same age, albeit at the cusp of retirement. I expect myself to be active for ten to fifteen years more.
Benefitting from better nutrition and science, every generation can expect a longer active life-span. Those in their twenties today are not going to look like those in the seventies today fifty years on. Staying active gets easier.
But it also points to us what needs to be done by way of policy in order to ensure we reap these demographic benefits: greater attention to public health, especially chronic debilitating diseases. We’ve got to fight hard against smoking, excess weight, diabetes and cardiovascular disease, for example. If we do this right, the need for immigration will be much reduced.