Asia Economy

Singapore's low birth rate poses economic problems, as Asia's demographic stress rises

Vivienne Khoo | News Assistant
A nurse holds a newborn baby at the labor ward of Singapore's Kandang Kerbau Hospital (KKH).
Angie Chan | AFP | Getty Images

Singapore's policymakers have long battled the country's low birth rate, and even a recent helping hand from start-ups may not be enough to offset looming economic pressures.

Dual-income families are the norm in the pricey city-state and the lack of time for family is frequently cited as a significant factor influencing couples' decisions on how many children to have, if they have any at all.

Singapore law provides for four months of paid maternity leave and in recent years the government has offered cash incentives of up to $18,000 for parents who have five children or more, and also legislated for a second week of paid paternity leave, but the measures have met with little success. Singapore's total fertility rate was 1.24 in 2015, far below the ideal replacement level of 2.1 needed to keep the population from shrinking.

Entrepreneurs like Tjin Lee are stepping in.

Lee is the co-founder of Trehaus, a child care center that's integrated with a co-working space. Launched this year, the facility was designed for working parents who wanted to stay close to their children.

"The truth is none of us want to have children and not be able to spend time with them," Lee says. "One thing [the government] could do is to incentivize or to compensate companies or to give them ways to help employees find a way to work from satellite locations that children can be near them."

Taking a long view, Lee hopes to operate the Trehaus concept as a business-to-business (B2B) platform, and encourage corporate sign-ups. But to effect a real change in Singaporean workers' mindset and encourage couples to take up parenting, Lee believes it will take more corporate participation and similar start-ups that encourage working while parenting.

"With more such working spaces, we could develop a community of co-working outfits that become island-wide and with close proximity to companies, they are more likely to approve of employees working from remote locations," Lee says. "With more flexibility, women will be encouraged to have more children." Lee adds.

Birth dearth in Asia

Singapore is not alone in the fight to raise the number of births. Across Asia, governments are attempting to tackle flagging birth figures, amid concerns about a shrinking future labor force and weaker economic growth prospects.

In Japan, Prime Minister Shinzo Abe has pledged to raise the country's birth rate to 1.8 children per woman as part of his "three arrows" of economic stimulus. China, meanwhile, has abolished its decades-long one-child policy to allow couples to have two children.

Here's an innovative solution for working parents
Here's an innovative solution for working parents

And it's not just mega-economies that are making a push for more newborns; Southeast Asian nations are also feeling the pressure.

"When you look at economies like Vietnam, the birth rate is declining pretty rapidly and that demographic profile will change from the youth-bulge they had in the Eighties and Nineties, into an aged population pretty quickly, by the mid-2020s to 2030," Tony Nash, chief economist at Complete Intelligence, explains.

But Nash also cautions that a large young demographic profile does not necessarily transform into economic gains.

"I think it depends on education, training support and the development of inward investments that creates opportunities for the young," he says. "If educated youth don't have opportunities, then their knowledge will atrophy and they won't become globally competitive."

Demographic stress

The negative economic impact of low birth rates is magnified by another trend: Life expectancy is on the rise and the ageing population is increasing. Slower population growth caused by a low birth rate in turn fails to offset a greater share of the aged, and as previous generations retire, it increases the burden of health care and pension provision by the working-age population.

According to the World Bank, East Asia and the Pacific areas are ageing the fastest and China and Japan have the greatest demographic stress levels. A recent United Nations report, meanwhile, says that both countries will see their "dependency ratios" rise, meaning that there will be more dependents and fewer workers in those countries by 2050.

However, despite the bleak outlook, the Asian Development Bank's Deputy Chief Economist Juzhong Zhuang sees opportunity amid the challenges.

"I think there's no need to be overly alarmed about it," he says. "Demographic changes can provide impetus for structural reforms."

It could also help push the growth model from a focus on resource accumulation to innovation, as well as driving industrial upgrades in order to improve productivity, Zhuang says.

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