Wednesday, 6 March 2013

Government responds to population paper by Workers' Party

By Imelda Saad, Channel NewsAsia, 5 Mar 2013

The Singapore government has issued its response to the Population Policy Paper released by the opposition Workers' Party on February 23.

It said if a realistic adjustment is applied to the Workers' Party's projections, the population would in fact go up by more than 200,000 and go beyond six million in 2030.

The WP's paper had sketched out a projected population of about 5.8 million by that time.

The government said one of the main differences is that the Workers' Party assumes a higher mortality rate and lower life expectancy of the citizen population.

This could underestimate both the size of the population and the number of elderly in the population.

This in turn, it said, would have implications on the dependency ratio - that is, the number of worker adults supporting the elderly.

The assumption would also affect Singapore's social and health services needed.

The government added that the WP's assumptions on labour force participation rates (LFPR) are also much higher than what's achieved by advanced developed economies with the highest LFPR today, and may not have taken into account the effects of our ageing population on LFPR.

It said there may be a need to make up for a 100,000 shortfall in the workforce if the party's projected labour force participation rate is not achieved.

They project a 0.5 per cent per year difference in GDP growth between their proposal and the government's. Abruptly closing off foreign worker inflows could disrupt the economy.

It said the net result could be much lower productivity and GDP growth than that assumed, and that the risk of a contracting economy is much higher.

And this, said the government, could impact wage growth and job opportunities.

"Until our TFR improves significantly, the immigration rate of 10,000 SC per year proposed by the WP does not replace the citizen population, and will result in a decline in the citizen population from 2030," it said.

The Workers' Party released its own paper on population, just two weeks after Parliament endorsed the Government's report charting the country's strategies to mitigate an ageing and shrinking population.

Titled 'A Dynamic Population for a Sustainable Singapore', the Workers' Party makes a case for a population projection of about 5.8 million by 2030 - down from the 6.9 million in the government's White Paper.

And the projection comes with an annual resident workforce growth of 1 per cent, a freeze to the foreign workforce growth rate, and a projected GDP growth of between 1.5 and 2.5 per cent in the next decade (2020-2030) - half a percentage point down from the government's GDP projections.

But like the government, the Workers' Party also believes in a strong Singaporean core. It disagrees, however, on how to sustain and nurture this core.

WP's proposal on labour force participation is "hopeful but unrealistic": Dr Khor
By Hetty Musfirah, Channel NewsAsia, 5 Mar 2013

Minister of State for Manpower Amy Khor has described the opposition Workers' Party's proposal to boost Singapore's labour force participation rate to 78.7 per cent by 2025 as "hopeful but unrealistic".

Speaking during the Budget Debate in Parliament on Tuesday, Dr Khor also explained why it would be challenging to push for a more progressive tax system.

The Workers' Party has said it's possible to grow the labour force participation rate by tapping on women and seniors. It said the rate for those aged between 15 to 69 years can go up to 78.7 per cent by 2025, compared to 72.2 per cent last year.

But Dr Khor said Singapore's total labour force participation rate is already one of the highest in the world.

Dr Khor said: "The labour force participation rate for older Singaporeans tend to be lower than the younger segments of the workforce. And as our workforce is getting older and with a low TFR (Total Fertility Rate), our overall labour force participation rate will decrease over time despite improvements across age groups.

"Hence the Workers' Party proposal in its population paper to raise labour force participation rate for those aged between 15 to 69 by 0.5 per cent per annum till 2025 to reach some 78.7 percent is hopeful but unrealistic as that rate is even higher than Sweden, currently 74.8 per cent."

On the tightening of foreign worker policies, Dr Khor reiterated that the government has chosen to adopt a calibrated approach instead of halting numbers.

"If the pace of change is too hurried, for example, by freezing the foreign worker growth immediately as some are championing, the consolidation may be too drastic and the job losses due to company failures, many of which are owned by Singapore, may be irreparable. The ultimate victim may be the Singaporean worker," she said.

Dr Khor also cautioned against pushing for a more progressive tax system to tackle the issue of income inequality.

She noted that the top 11 per cent of earners in Singapore already contribute almost 80 per cent of the total tax takings, compared to 45.1 per cent in the United States and 31.6 per cent in OECD countries.

Dr Khor said: "Singapore is already far more progressive than the US and OECD average in terms of personal income tax. So there may not be much scope to raise income taxes here without affecting Singapore's international competitiveness."

She acknowledged the opposition's support for measures to address the income divide.

Pointing to initiatives like the higher Workfare Income Supplement, she said this year's budget redoubles efforts on social equity and to uplift the lives of low-wage workers and the vulnerable elderly.

Dr Khor said: "No budget in a single year can satisfy all the diverse and often opposing needs of Singaporeans. There will always be some trade-offs, and I submit, "trade-offs" is not a bad word or an excuse for poor thinking or a lack of fresh ideas.

"In my view, Budget 2013 is a well calibrated budget that builds on our efforts to transform our economy to achieve quality growth that will provide all Singaporeans with a better life and at the same time tackle the short-term pains and challenges faced."

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