Sunday 3 February 2013

Population White Paper strikes careful balance, says DPM Teo Chee Hean

By Goh Chin Lian, The Straits Times, 1 Feb 2013

WHILE Singaporeans' concerns about a 6.9 million population are understandable, Deputy Prime Minister Teo Chee Hean yesterday said the White Paper strikes a careful balance to bring about good-quality growth that is neither too fast nor too slow.

The aim is not for the fast growth of the past but for enough growth for good jobs and decent wages for Singaporeans, he said.

Mr Teo was speaking to reporters at a Home Team event, two days after the release of the Government's White Paper on Population, a road map to take Singapore to 2030. It aims to strengthen the citizen core, create jobs and ensure a good living environment.

Since its release on Tuesday, the White Paper has drawn criticism both online and off, with many homing in on its projected population of up to 6.9 million in 2030. Mr Teo said it is understandable that people are concerned about competition for jobs, the presence of many foreigners and infrastructure constraints.

He said the Government's priority is to address these immediate concerns, especially in housing and transport.

Mr Teo also fleshed out two scenarios, neither of which would produce desirable outcomes.

The first is for Singapore to stay put at its current population of 5.3 million. The workforce will shrink sharply when the number of Singaporeans at the retirement age of 65 and above triples to 900,000 by 2030.

Businesses will find it harder to get workers. Investments may dry up. New good jobs may be harder to come by, especially for younger Singaporeans. There will not be enough people to care for the growing ranks of the elderly. The other scenario - to grow as fast as in the last 30 years - will put pressure on land and infrastructure.

The White Paper seeks to strike a "careful balance between both scenarios", Mr Teo said.

It means halving workforce growth to 1 per cent to 2 per cent a year up to 2020, and down to 1per cent from 2020 to 2030.

"This is a major shift in our economic gears," he said. Economic growth will slow to 3 per cent to 5 per cent up to 2020 and between 2 per cent and 3 per cent up to 2030. And it will no longer be driven by workforce growth.

"What we are looking for then is high-quality, productivity-driven growth which will bring good lives, good jobs and decent wages," said Mr Teo.

The plan calls for a transformation of the workforce to take on higher-value jobs. But that will require two complementary groups of foreigners, to fill vacancies in lower-skilled jobs, from construction to elder care, and to "spark, create, enter new markets, kick-start new industries, to create the type of good jobs that our young Singaporeans will want as they enter the workforce".


One, we freeze where we are today. It means that new good jobs may be difficult to come by, especially for younger Singaporeans in the future years because investments have dried up. There may not be enough people to take care of all the needs of Singaporeans...

The other scenario is where we continue as we have done for the past 30 years... That will put very serious pressure on Singapore, well beyond our constraints.

- DPM Teo Chee Hean, on how the Government is trying to find the right balance between the two scenarios

White Paper all about 'planning ahead'
By Leonard Lim And Goh Chin Lian, The Straits Times, 1 Feb 2013

THE White Paper on population is about planning ahead to avoid the infrastructure bottlenecks that plague Singapore today, Minister in the Prime Minister's Office Lim Swee Say said last night.

Speaking at a Singapore Conversation event where some grassroots activists criticised the policy paper released on Tuesday, Mr Lim acknowledged the current angst surrounding overcrowding on public transport, a tight housing market and an influx of foreigners.

Mr Lim, the deputy chairman of the People's Association (PA), said: "Just imagine if 10 years ago, we had a Singapore Conversation to talk about one day 10 years from then... population may reach 5.4 million, then start to put in place infrastructure, housing, MRT. Today, we will be much better off, isn't it?"

The population was 5.3 million last year, up from 4.1 million a decade ago. The White Paper has projected that it will range between 6.5 million and 6.9 million in 2030.

Mr Lim said the White Paper is a way to "look ahead and ask ourselves what kind of future we like to have and how do we get there, and along the way, what kind of challenges we are going to face". Parliament will debate the White Paper next week, he added, and this is a "good exercise" in planning ahead.

Yesterday's event, attended by about 100 grassroots leaders, was held to sum up the views expressed during more than 155 Our Singapore Conversation sessions organised by the PA and grassroots organisations.

Among those who criticised the White Paper was Mr Poon Mun Wai, 60. The Serangoon Citizens Consultative Committee vice-chairman said: "I'm very disappointed with this 6.9 million figure. It's logically and emotionally not acceptable."

Another participant said the Government's intent to allow more foreigners in made her question if it was "really listening" to Singaporeans.

Education Minister Heng Swee Keat, who heads the committee overseeing the national conversation, said the White Paper has been a work in progress for over a year.

The question was whether the national conversation should stop, or continue despite the White Paper, he said. But there was value in having them both in parallel, he added, though he did not elaborate.

Other concerns raised by the 20 grassroots leaders who spoke last night included the hiring of older workers and the overemphasis placed on academic grades. Some were worried that bosses would not treat older workers fairly. One said he knew of a retired teacher who was rehired but suffered a 30 per cent pay cut.

But there were others like Mr Joseph Chan, 60, a regional director at Beswick Engineering, who said he has had young engineers asking for a starting salary of $4,500, while those above 50 years old were demanding twice as much.

He said seniors should adjust their expectations.

Some grassroots leaders also felt that Singaporean bosses should look not only at academic grades, but also a person's ability.

One said his friend was not offered a teaching job because her degree was from a private university, and not one of the public universities here.

Responding, Mr Heng said that of the 10,000 applicants to be teachers, only 2,000 get accepted each year.

If they were all given a chance to try their hand in class for two weeks, as one person suggested, there would be "a lot of accidents" and parents would not accept it either, he said.

6.9m figure an aggressive projection: Khaw
Better to plan for worst-case scenario than to underprovide, says minister
By Rachel Chang, The Straits Times, 1 Feb 2013

A POPULATION estimate of up to 6.9 million may look intimidating, but an "aggressive projection" is necessary so that planners can prepare for the worst, said National Development Minister Khaw Boon Wan yesterday.

That is better than a scenario where "we plan for the best, and then the worst comes, then you'll be underproviding as what happened in the last few years".

Speaking at the HDB Hub before the release of his ministry's Land Use Plan, which details how a 6.9 million population will fit, Mr Khaw compared it to throwing a wedding banquet.

"You're organising a wedding banquet and you invited 1,000 people but your guests did not RSVP, so you don't know how many are coming," he said. "Will it be 700, 800, 900 or a thousand? What do you do? I think to avoid embarrassment and chaos, you prepare for the maximum.

"And if 700 or 800 turn up, yes, it costs you some money, there's some wastage, but you avoid embarrassment and chaos. On the other hand, if you want to save money, you just provide for 700, cross your fingers, but if 800 turn up, then there will be under-catering."

While over-catering results in wasted food, land is less perishable and so the Government is confident it can calibrate its plans, he said, adding that the housing supply will be "paced accordingly, a little bit ahead of demand".

He pointed out that people actually have no idea how big the total population is in their day-to- day lives. In a day, they interact with a few hundred people, not five million. Hence, the top- ranked cities for liveability include both big populations and small ones.

With sensitive planning and infrastructure built ahead of time, "there can be a very nice city life". Urging Singaporeans to trust the Government, he said planners can achieve this in time and added: "Please, don't worry."

Future technological breakthroughs will help make more efficient use of resources, he said.

For example, there could be cars with no drivers - already being tested in some parts of the United States - on Singapore's roads by 2030 to ease congestion. Such vehicles are controlled electronically and can, for example, be instantly re-routed away from the scene of an accident.

He also wants to see cycling take off here, not just recreationally but as a means to get around.

In future, he hopes that people will no longer be attached to the idea of owning a car, and certificates of entitlement will thus not be a "headache to everybody".

Immigration pluses and minuses
By Freddy Liew, Published The Straits Times, 31 Jan 2013

THERE has been much recent discussion on the topic of population in Singapore. The population white paper released on Tuesday deals at length with the issue. Overall population is expected to rise to around six million by 2020 and seven million by 2030.

The paper established a key theme, which is to build a more sustainable population that better matches population needs with economic growth.

But is there such an optimal population figure, given the dynamic and ever-changing global economy? The question should focus on how Singapore gains from immigration and how these gains can be fairly distributed so as to reduce the income disparity.

Economic literature supports the economic benefits of immigration - it brings about higher quantity and quality of labour that drives growth in economies.

A recent study by Professor Matthew Sanderson, a sociologist at Kansas State University, has shown that immigration brings about a "Matthew Effect" (a reference to the Biblical Book Of Matthew's "the rich get richer"), where wealthy countries gain more in terms of real GDP per capita due to immigration.

Professor Sanderson's 230-country study, published in 2012, includes Singapore, which it said benefited from immigration.

Among the findings:

First, there is a positive correlation between international migration and the level of economic development - that is, countries with international migration tend to also have higher economic development levels.

Secondly, this broad correlation is qualified by income levels in the countries studied, whereby the higher income the country, the more the country is expected to gain from an open immigration policy.

Thirdly, the study also suggests a disproportional effect from immigration, with income gains of US$29.49 (S$36.34) per person in high-income countries, but only US$1.99 per person in middle-income countries and just US$0.58 per person in low-income countries.

Thus, economic growth may be propelled by accepting a larger foreign population growth. In fact, Singapore needs it since productivity changes require developmental time. But some empirical studies have shown that the poor or lowly skilled were worse off.

This is pertinent to the discussion in Singapore.

A paper last year by Singapore's National Population and Talent Division (NPTD) recognises the economic need for foreign immigrants, including in occupations that Singaporeans may be less willing to take up. Due to its ageing population, Singapore requires another 115,000 foreign health-care and domestic workers in the next few years.

To continually satisfy infrastructure and housing needs in Singapore, a projected increment of 30,000 construction workers is required for the next few years.

These are needs of society and, thus, it is important not to fully turn off the immigration tap.

However, an important study put forth by Professor Pia Orrenius and Professor Madeline Zavodny, former economists at the federal banks of Dallas and Atlanta respectively, showed that immigration has differing effects on citizens with different skill levels.

In their model, professionals' wages have risen due to immigration, while those of manual workers have fallen.

The study found that one key reason is due to differences in the "degree of substitutability" between immigrants and locals across skill levels.

Low-skilled local workers are more easily replaced or substituted by foreign workers, as it's easier for foreign workers to pick up the skills needed and cheaper for them to be trained; also, foreign workers have a tendency to accept below-market wages. This forces low-skilled residents to accept falling wages.

On the other hand, the influx of immigrants creates new investments leading to high-paying jobs. Local skilled workers who are able to upgrade easily benefit from taking on these new jobs higher on the value chain, thus increasing their earnings.

In Singapore, this has unfortunately become the case. According to the Ministry of Manpower's surveys, the median basic wage of cleaners fell from $1,015 in 1999 to $900 in 2011. This is in comparison to professionals' wages, which increased from $3,350 to $4,380 in the same period.

To be sure, immigration was probably not the only factor explaining these wage trends.

However, too loose an immigration policy, allowing an influx of less-skilled workers, might have been one factor that worsened income inequality. This is an important issue that needs thorough study.

The writer, an education officer, has a Master of Economics from Singapore Management University's postgraduate economic research programme.

Projected population rise raises concerns
Worries of businesses and ordinary Singaporeans pull in opposite directions
By Jeremy Au Yong, The Straits Times, 31 Jan 2013

THE trade-offs inherent in the population debate crystallised sharply yesterday in the divergent reactions Singaporeans had towards the Government White Paper released on Tuesday.

While there were concerns across the board about the prospect of the population figure coming close to seven million in 20 years' time, the worries of businesses and ordinary Singaporeans pulled in opposite directions.

For employers, the issue was the possibility of further cuts to what they consider to be an already tight foreign worker quota. For the man on the street, the worry centred on what a larger population might mean in the competition for homes, jobs, health care and education.

Meanwhile, some economists began to project that contributions from the manufacturing sector here could shrink from about 25 per cent to 15 per cent.

On Tuesday, the Government unveiled the Population White Paper that set out a road map on how it plans to tackle the problems of an ageing society and low birth rate over the next two decades. The headline-grabbing scenario involved a projected population of up to 6.9 million in 2030, with 55 per cent making up the Singaporean core.

Even then, that population size only translates into more modest economic growth rates of between 2 per cent and 3 per cent, down from the 3 per cent to 5 per cent growth projected in the past.

Many have now had a day to digest the 41-page document, but different stakeholders are drawing very different conclusions.

Businesses, especially small and medium-sized firms, said they had been grappling with recent curbs on foreign workers and now fear that more cuts could come as soon as next month.

The Singapore Chinese Chamber of Commerce and Industry said: "We agree that Singaporeans must remain the fulcrum... However, a dynamic economy, which is our ultimate goal, also requires the right mix of Singaporeans and foreign talent whose skills combine to keep the economy functioning well."

In the same vein, Singapore Business Federation chief operating officer Victor Tay warned: "With slower economic growth, worse business performance, workers' increments and bonuses will be correspondingly smaller. Is that what we all want? We have to come to a compromise."

For ordinary Singaporeans, the promise of two-thirds of future jobs being white collar or the pledge to provide a high quality of life might sound hopeful, but it also raised fears about heightened competition in the future.

Some 85 out of 100 people polled were either opposed to or unsure about the idea of the population growing by some 30 per cent from its current 5.3 million.

MPs said it would be tricky finding the right balance between workers' needs and concerns about overcrowding and competition. But they stressed that the White Paper scenario was by no means a firm target set in stone.

Holland-Bukit Timah GRC MP Liang Eng Hwa said he is still formulating his arguments for the parliamentary debate on the issue next week, but added that the key question has to be what the projections mean for Singaporeans.

"Is this better off for Singaporeans or not, to grow at this pace? And as we look to move ahead, we also need to satisfy ourselves that we are able to solve problems like the infrastructure bottlenecks."

The White Paper can be found at

Steps needed to convince Singaporeans about population increase
By Ashley Chia Neo Chai Chin, TODAY, 30 Jan 2013

Judging from the immediate reaction to the Population White Paper soon after its release, the Government looks to have its work cut out to convince some Singaporeans that the nation can cope with 6.5 to 6.9 million people on the island.

Members of Parliament (MPs) TODAY spoke to acknowledged that steps have to be taken— including making sure the policies set in motion bear fruit — before Singaporeans can accept the increase in population.

Nee Soon GRC MP Lee Bee Wah said: “It is not easy to convince (Singaporeans) because people will think that ‘every day I go to work, (it) is already so crowded’.”

She added: “No point talking to them about all these theories ... If you don’t help them to see, resolve the current problem, they won’t be convinced. My suggestion is that you have to resolve the current problem first.”

Some netizens felt the numbers were “frightening”, others noted that infrastructure today has yet to catch up with demand. An overseas Singaporean even wrote that he would stay away and not return to the Republic. Amid the chorus of doubters were some netizens who viewed the White Paper more positively, with one pointing out the need for a sufficient base of working-age people to support the growing ageing population.

Social and policy researchers suggested specifying the types of skills needed from foreigners and beefing up Singaporeans’ sense of security to get the public behind the new population projections.

Policymakers could spell out the areas or sectors where immigrants were needed, as is the practice in some other countries, said Institute of Policy Studies Senior Research Fellow Leong Chan-Hoong. “They may say, if you are an expert in biomedical science or if you are an expert in IT, the chances of getting a long-term residential visa or permanent residency will be much higher than someone else (without such skill sets).

“That kind of transparency and information will be more reassuring and helpful,” said Dr Leong, who added that resentment is generally of the policy towards foreigners, and not the foreigners themselves.

Sociologist Tan Ern Ser said the social and psychological barriers would be harder to overcome than physical barriers when it comes to a higher population density. The “fundamental solution” lies in strengthening Singaporeans’ sense of security, which can lead to more generosity of spirit towards new immigrants and foreigners in our midst, he said.

On some Singaporeans’ resistance to more new immigrants, Ms Lee noted: “If Singaporeans can give birth to more children then, of course, we don’t have to bring in foreigners — that will be the most ideal.”

But she noted that with the dismal birth rates, it would be ambitious to think that they could be raised to such a level that Singapore will need fewer new immigrants in the future.

Now that the White Paper — nearly a year in the making — is out, Chua Chu Kang MP Zaqy Mohamad reckons it is time for more engagement: For Singaporeans to seek reassurance and ask questions, and for the Government to communicate its planning considerations. This way, a consensus can be forged and citizens can be assured that they would not be disadvantaged.

He said: “It has to be a process which the Government has to undertake in terms of helping (Singaporeans) understand the considerations ... Perhaps through the various dialogue platforms … we try to get some consensus.”

Shock over population projection misplaced
From Su SiCheng, Published TODAY, 1 Feb 2013

I noticed many shocked reactions to the recent projection of Singapore’s population in 2030. A majority of these reactions are misplaced, for three reasons.

Firstly, a population of 6.9 million in 2030 sounds like a huge jump from our current population of just over five million, but it reflects an average growth rate of only 1.6 per cent a year.

While this is not negligible, it is more manageable than the average population growth of 3.2 per cent per year since 2006.

Secondly, we will have a large population in 2030 only if a large number of people want to come here, which will only happen if Singapore becomes a better place to work and live.

In other words, planning for a large population necessitates making Singapore a better, not a worse, place to be.

Thirdly, and most importantly, the frustrations in recent years over the crowding in Singapore are not because of population growth, but rather because infrastructure has not kept up with population growth. In short, we did not plan well.

A plan now for a bigger population in the future means being committed now to increasing our infrastructure at a faster rate, to prevent similar strains from happening when growth comes.

It would be a greater worry if we should plan for a small growth rate, increase infrastructural capacity slowly and then find in 2030 that we are suffering and struggling because we were unprepared for a higher-than-expected growth.

All of us want Singapore to become a more pleasant place to live.

But let us look beyond our initial reaction and realise that making Singapore better is not a matter of planning for less, but being prepared for more.

Cutting workforce growth brings ‘serious consequences’, SBF warns
TODAY, 1 Feb 2013

The Singapore Business Federation (SBF) has raised serious concerns about the impact of the cut in workforce growth proposed by the White Paper on population, warning that some companies may have to close and jobs will be lost as a result.

Mr Ho Meng Kit, Chief Executive Officer of the SBF, said: “The reduction in workforce growth has very serious consequences for businesses. Some Singaporeans do not realise its impact but are seized with the prospect of an over-crowded island with 6.9 million people.”

He added: “We must explain to Singaporeans that many businesses will be in jeopardy if they cannot adjust to this demographic tsunami that will hit us. If businesses go under, jobs will be lost, Singaporeans will be affected.”

The White Paper projected that by 2030, the population could grow to between 6.5 and 6.9 million. However, amid an ageing population and limits on foreign labour, the workforce will grow, on average, by a mere 1 per cent per year between 2020 and 2030.

This decade, the workforce will grow by an average of 1 to 2 per cent per year — below the 3.3 per cent rate seen in the previous three decades.

The slowing workforce growth rate will constrain businesses and limit economic growth, and will have “devastating consequences for many companies”, the SBF said.

Although the number of Singaporeans in professional, managerial, executive and technical (PMET) jobs will increase, this will result in a shortage of local non-PMETs, the SBF noted. Industries, such as retail, hotel and food and beverage, are already struggling to attract enough lower-skilled local workers and the situation will worsen in the future, with some businesses having to close.

“Those which can survive will face tight labour supply and high labour costs. Singaporeans should be prepared for higher costs of such domestic services and lower service quality levels,” the SBF added. It also warned of the consequences of failing to reach productivity growth of 2 to 3 per cent, which the Government said will be a key factor in achieving gross domestic product growth of 3 to 5 per cent.

If productivity cannot be improved, Singapore’s economic growth will be “anaemic”, and this will have “repercussions on wages, employment and Singapore’s attractiveness as an international business destination”.

Stressing that it is “unthinkable if Singaporeans choose to further limit immigration and the number of foreign workers”, Mr Ho said: “If businesses cannot raise productivity and sustain profits, they cannot afford to pay Singaporeans higher salaries.”

Mr Lawrence Leow, Chairman of the SBF-led SME Committee, said: “We urge the Government to delay further tightening of foreign worker restrictions until there is clear evidence of small businesses succeeding in business restructuring and productivity increment.”

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