Singapore’s ageing population has been a problem that the government has been trying to solve since 1986*. There are several economic and social policy implications of a rapid ageing population, which will affect both the Singaporean society and businesses. One of the most apparent economic implications is the increase in the old age dependency ratio that will occur within the next 20 years. Currently, 9% of Singapore’s population is over the age of 65. However, by 2030, this will increase to 19%.* Prime Minister Lee Hsien Long stated that by 2050, the median age will be 54.
This trend means that there will be fewer working adults to look after more aged dependents in the future. As Singapore is currently not a welfare state, the demographic changes could especially impact the Gross Domestic Product (GDP) should future government support for the elderly be implemented.
The sharp reduction in labour growth due to the ageing population is estimated to cause average GDP to slow to 3.9% between now and 2030, down from 6.9% from 1981 to 2005. This would be the biggest absolute fall in GDP growth among 16 Asia-Pacific economies. Furthermore, the ageing population is also likely to hurt public finances as mandatory public pension plans may become inevitable, with additional expenses equal to 7.6% of GDP.** The economic implications will heavily affect businesses. Not only will they will have a smaller labour force to pick employees from than they currently do, but the bleak economic outlook will also affect the purchasing power of the customers. Businesses that specifically cater to the young will suffer the most as the demand for services to aid the elderly will be prioritised.
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