GE SPECIAL: POST-GE2020

Singapore GE2020: Population debate should not be about picking a number

What population Singapore can support turns on how it prepares

In 1980, when Singapore was still a developing country, its population was 2.4 million. Suppose the government of the day had announced a target for the population to more than double to 5.7 million by 2019, what would the public reaction have been?

More than a few people would have been horrified. How would Singapore, with its limited space, be able to accommodate such an increase, it would be asked. How would the public transport system (then comprising mainly buses) cope? Where would the additional people be housed? What would happen to jobs and wages? Wouldn't average incomes go down?

Development experts might also have raised concerns. It was the received wisdom that population growth, especially in developing countries, was one of the biggest causes of poverty. A few years earlier, Mr Robert McNamara, then president of the World Bank, had pronounced: "To put it simply, the greatest single obstacle to the economic and social advancement of the majority of peoples in the underdeveloped world is rampant population growth."

As we know, Singapore's population did indeed increase from 2.4 million in 1980 to 5.7 million by 2019. But over the same period, per capita income rose from about US$4,900 to US$65,000 (S$90,500), a level higher than Australia, Britain and Japan, among other countries that were previously richer.

In other words, while population increased by around 2.4 times, the average income per head rose by more than 13 times, and Singapore transitioned from the developing world into the ranks of the advanced economies. It maintained close to full employment for most of the 40-year period, other than brief recessions in 1985, 1998, 2001 and 2008, and even had labour shortages from time to time.

Singapore was not the only country that experienced rising prosperity as its population rose. While it is a particularly striking example - even more so if we go back to the 1960s - the same is true of much of Europe and the Americas as they became more prosperous, and large parts of Asia. Even relatively poor and allegedly overpopulated countries like India and Indonesia have seen increases in per capita income that have far exceeded their population growth, which has now slowed to around 1 per cent.

AGGLOMERATION EFFECTS

It is also no accident that some of the world's densely populated economies - such as Belgium, the Netherlands, Hong Kong, Japan, Taiwan and South Korea - are relatively wealthy, while many with sparse populations are relatively poor. This is also true of regions within countries. Economic research has shown that dense populations create what urban economists call "agglomeration effects" - that is, clusters of economic activity, synergies and knowledge spillovers.

Of course, all of this does not mean that further increases in population would be sufficient to guarantee greater prosperity - other conditions would also need to be met. But it does suggest that we should not think about population growth mechanically, in terms of the amount of land or physical capital per head or under the assumption that such things as land use and infrastructure remain frozen in time, or that technological change doesn't exist.

It also suggests that we should not extrapolate that the future will be like the present, only with more people. That is not how economic reality turns out.

Those who were around in 1980 would remember that Singapore's infrastructure was far behind what it is today. Large parts of the city were undeveloped - there were still pig farms in Punggol, rubber estates in Sembawang and Tampines had just started being transformed from forests and sand quarries into a residential estate. Many of today's HDB towns didn't exist.


Economic research has shown that dense populations create "agglomeration effects" - that is, clusters of economic activity, synergies and knowledge spillovers. This does not mean that further increases in population would guarantee greater prosperity. But it does suggest that we should not think about population growth mechanically, in terms of the amount of land or physical capital per head, the writer says. ST PHOTO: LIM YAOHUI

 
 
 

There was no MRT, no Marina Bay, no Raffles City, no suburban malls to speak of. Expressways such as the AYE, CTE, BKE, TPE, KPE, SLE and KJE hadn't been started. Changi Airport's solitary terminal was in the final stages of construction. Many of today's popular tourist attractions like the integrated resorts, Gardens by the Bay, the Night Safari, Boat Quay and Clarke Quay were not even dreamed of. International restaurants were relatively few and far between, and the arts scene was a shadow of what it is today.

Among industries, Singapore had not yet moved into electronics or pharmaceuticals, which were later to become the mainstays of the manufacturing sector. Jurong Island, which became the heart of Singapore's chemical and energy industries, was nowhere on the horizon and nobody talked much about R&D. Tourism - measured by visitor arrivals - was about one-eighth of what it was in 2019.

The external environment was also quite different. Notably, China was still a poor country - its economic reforms had only just started, India suffered from low growth and the economies of Asean were not as dynamic as they later became.

The economic transformation of Singapore would not have been possible without an increase in population. Without Singapore being able to provide the requisite workforce - both local and foreign, companies (both local and foreign) would not have been able to invest in Singapore or expand or upgrade their operations here, and this is true of every industry and almost all services. In other words, without the increase in population, Singapore would not have been able to move into the ranks of advanced economies. This is worth remembering.

A HOT-BUTTON ISSUE

The question now is where we go from here. Population has been a hot-button issue, especially after the release of the Population White Paper of 2013, but much of the debate has been about numbers. During the recent election campaign, some members of the opposition accused the People's Action Party (PAP) of "toying with the idea" of a 10 million population, forcing the PAP to point out that it had done no such thing.

For many Singaporeans, a population of 10 million in the future sounds scary - probably even more scary than a population of 5.7 million would have sounded in 1980 - which is perhaps one reason why some politicians decided to raise the issue.

But fixating on a number - any number - is misguided. The only sensible answer to the question "how many people can Singapore support?" is "it depends".

 

As the past has demonstrated, it depends on Singapore's capacity to expand its health, education and transport infrastructure as well as its housing stock, its ability to continue attracting investments, the nature of those investments, the kind of industries that come up in the future, the extent of automation and innovation, the state of technology and external market conditions.

It also depends on the demographic profile of the population, society's readiness to tolerate greater diversity and what trade-offs people are willing to accept - for example, in terms of rising prosperity on the one hand and the dilution of identity on the other.

In short, it's a complicated question with no easy answers. Singapore's planners in 1980 did not set any population target - it was business-friendly policies, economic growth, changes in the external environment, the influx of investments and the expansion of infrastructure that both necessitated and accommodated the more than doubling of the population between then and now.

The challenges of the future will of course be different from those of the past. The Covid-19 pandemic has triggered a global recession. But looking beyond, economies will recover, and technological changes are likely to accelerate - which Singapore is well positioned to deal with.

Singapore can also take some comfort in the fact that it is at the heart of what will remain the fastest-growing region of the world. These developments, as well as domestic policies and politics, will determine what Singapore's labour needs will be.

THE DEMOGRAPHIC CHALLENGE

But there is one issue that looms large, which was absent in the 1980s, and that is demographics.

 
 

Those who propose easy answers to the population issue by stipulating a number at which a population should be "capped" - especially at a level not far from where it is today - have an obligation to explain how they plan to raise the fertility rate (the average number of children born per woman) which has been falling since 2014 to 1.14 last year, which is well below the replacement rate (the rate required to maintain the population at a constant level) of 2.1 and how fast they will be able to do it.

Meanwhile, they must explain how they will deal with the issue of the decline of the working population from this year onwards - some 900,000 baby boomers are expected to retire between now and 2030. How do they plan to plug such a huge gap in the labour force, especially if they frown on immigration? None of these issues was raised in the context of the population debate during the campaign by those who cited big, scary-sounding numbers.

The population issue will not go away even if its brief moment as an election campaign issue is over. It will need to be discussed, and when it is, the discussion will hopefully be about more than picking a number.

A version of this article appeared in the print edition of The Sunday Times on July 19, 2020, with the headline 'Population debate should not be about picking a number'. Print Edition | Subscribe