MEETING /
COPING WITH ZERO-GROWTH RUTHE KEE |
4.11.2011
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Abeysinghe at the Singapore Economic Forum 2009. Credit: Economic Society of Singapore
Singapore does not have to strive for infinite economic growth by increasing the local population on the small island, because it is already one of the richest in terms of per capita Gross Domestic Product, a notable economist said on Nov. 2, 2011.
Tilak Abeysinghe, Associate Professor of economics at the National University of Singapore, said that Singapore ranks above some of the most advanced economies such as Japan, Germany and the United States.
Even with a greying population, Singapore can cap annual growth of worker output at 1 to 2 percent, he suggested, and still achieve substantial improvement in standard of living. Singapore expects three to five percent economic growth in the coming years.
Citing Japan as an example, the economics professor said that despite capping an annual average economic growth at 2.15 percent for the past two decades, Japan’s standard of living still ranks as one of the highest in the world.
Despite this, the need for foreigners remains because Singapore holds one of the lowest fertility rates in the world, hitting an all time low of just 1.15 in 2010, he stressed.
Failing to add more to the ranks of working adults, he said at a panel discussion with two other speakers, could result in problems like increased unemployment and inflation.
Three factors determine the growth of per capita income of the resident population excluding permanent residents, namely supply of foreign labour, labour force participation and labour productivity, he stressed.
“The resident population has to stay at 4 million, but foreigners must come in, or per capita income growth is hindered,” he told an audience of 15 at the discussion organised by the Asia Research Institute.
As a result, it is prudent for Singapore to decide on an optimal population size and implement policies to cope with the zero resident population growth, he pointed out.
Abeysinghe was one of three speakers at the panel discussion. A major focus of his research is on the econometric modelling of the Singapore economy, forecasting and policy analyses.
Other speakers included Yap Mui Teng and Gavin Jones, researchers of family issues at the Institute of Policy Studies and ARI respectively.
Based on economic projections, Abeysinghe said it is undesirable for Singapore to drastically curb foreign labour supply. Close to 145,000 workers, including Singapore residents would lose their jobs should the number of foreign migrants be capped at the 1994 level. This projection also predicts an inflation of 6 percent for consumer products.
In essence, if the emphasis can be shifted away from maintaining high economic growth levels, Singapore can make do with less foreign workers, even in a zero growth scenario. However, Abeysinghe said, it is against Singapore’s own interests to completely abandon foreign labour.
Yap, who spoke about the impact of persistently low fertility rates on the future resident population, concurred in her speech. While the number of foreign workers can be decreased, she said, it is not advisable to dramatically reduce the foreign labour force.
Abeysinghe said there is room for increasing labour force participation of the resident population by increasing the retirement age and by attracting more mothers back to the workforce to cope with a zero growth scenario. If the elderly population is healthy, he said, they can work much longer beyond the current retirement age.
“Self-responsibility in healthcare keeps Singaporeans healthy,” Abeysinghe said, referring to Medisave policies implemented by the government.
However, low skilled workers typically work in physically demanding jobs requiring them to retire earlier than highly skilled labour, indicating the need for different approaches to retirement, he said.
“Labour productivity improvement [also] requires technological progress which is hard to predict,” Abeysinghe said.
“If Singapore could build up its info-communication like Japan did, Singapore should be good [despite the zero-growth scenario],” Gaurav Bhargad, 21, said. Bhargad is a second-year business administration student from the Amity Global Business School in India. He is here to conduct research on the difference between demographic features in Singapore and India.
Also among the audience was Kang Kai Lun, 35, a civil servant. “It’s nice to think that there’s still room for growth,” he said. “One would not think that with [less] foreign labour, we can still have growth.”
Tilak Abeysinghe, Associate Professor of economics at the National University of Singapore, said that Singapore ranks above some of the most advanced economies such as Japan, Germany and the United States.
Even with a greying population, Singapore can cap annual growth of worker output at 1 to 2 percent, he suggested, and still achieve substantial improvement in standard of living. Singapore expects three to five percent economic growth in the coming years.
Citing Japan as an example, the economics professor said that despite capping an annual average economic growth at 2.15 percent for the past two decades, Japan’s standard of living still ranks as one of the highest in the world.
Despite this, the need for foreigners remains because Singapore holds one of the lowest fertility rates in the world, hitting an all time low of just 1.15 in 2010, he stressed.
Failing to add more to the ranks of working adults, he said at a panel discussion with two other speakers, could result in problems like increased unemployment and inflation.
Three factors determine the growth of per capita income of the resident population excluding permanent residents, namely supply of foreign labour, labour force participation and labour productivity, he stressed.
“The resident population has to stay at 4 million, but foreigners must come in, or per capita income growth is hindered,” he told an audience of 15 at the discussion organised by the Asia Research Institute.
As a result, it is prudent for Singapore to decide on an optimal population size and implement policies to cope with the zero resident population growth, he pointed out.
Abeysinghe was one of three speakers at the panel discussion. A major focus of his research is on the econometric modelling of the Singapore economy, forecasting and policy analyses.
Other speakers included Yap Mui Teng and Gavin Jones, researchers of family issues at the Institute of Policy Studies and ARI respectively.
Based on economic projections, Abeysinghe said it is undesirable for Singapore to drastically curb foreign labour supply. Close to 145,000 workers, including Singapore residents would lose their jobs should the number of foreign migrants be capped at the 1994 level. This projection also predicts an inflation of 6 percent for consumer products.
In essence, if the emphasis can be shifted away from maintaining high economic growth levels, Singapore can make do with less foreign workers, even in a zero growth scenario. However, Abeysinghe said, it is against Singapore’s own interests to completely abandon foreign labour.
Yap, who spoke about the impact of persistently low fertility rates on the future resident population, concurred in her speech. While the number of foreign workers can be decreased, she said, it is not advisable to dramatically reduce the foreign labour force.
Abeysinghe said there is room for increasing labour force participation of the resident population by increasing the retirement age and by attracting more mothers back to the workforce to cope with a zero growth scenario. If the elderly population is healthy, he said, they can work much longer beyond the current retirement age.
“Self-responsibility in healthcare keeps Singaporeans healthy,” Abeysinghe said, referring to Medisave policies implemented by the government.
However, low skilled workers typically work in physically demanding jobs requiring them to retire earlier than highly skilled labour, indicating the need for different approaches to retirement, he said.
“Labour productivity improvement [also] requires technological progress which is hard to predict,” Abeysinghe said.
“If Singapore could build up its info-communication like Japan did, Singapore should be good [despite the zero-growth scenario],” Gaurav Bhargad, 21, said. Bhargad is a second-year business administration student from the Amity Global Business School in India. He is here to conduct research on the difference between demographic features in Singapore and India.
Also among the audience was Kang Kai Lun, 35, a civil servant. “It’s nice to think that there’s still room for growth,” he said. “One would not think that with [less] foreign labour, we can still have growth.”