Older generation still pay their way in society

By Kanwaljit Soin, Published The Straits Times, 6 Feb 2014

THE recent announcement of a special package for the "pioneer generation" has set Singapore abuzz.

Some questions being asked include the following: Who should be considered as comprising the pioneer generation? What benefits will they be entitled to in appreciation of their contributions to the country?

Some younger people are also asking if they will be similarly rewarded in their old age. Won't they also have contributed to the country by then? The Government has promised a special hongbao (red packet) for the pioneer generation. Details will be announced on Sunday.

This is part of efforts to honour the "special generation" that built Singapore. For this group, wages were low and social benefits few through much of their working life. Today, many have dwindling or little Central Provident Fund (CPF) or other retirement savings. The thinking is that the country can afford to help them with health care and other benefits in high-cost Singapore today.

The response to news about the "pioneer generation package" set me thinking of intergenerational solidarity and population ageing. Some people wring their hands at the so-called ageing tsunami that is approaching as a result of more people living longer and fewer babies being born. Some politicians also warn of the increasing burden that will be imposed on the young, and the possibility of intergenerational conflict.

What is inaccurate and sad is that the relationship between the generations is usually construed as a one-way street. Fewer younger workers, it is argued, will be paying higher taxes to support the health and long-term care costs of more and more older people. What is not portrayed clearly is that there is a two-way exchange between the generations. The younger generation is supported by investments made by the older generation in education, infrastructure and innovation.

And who is really looking after the elderly anyway? A survey by the Ministry of Social and Family Development, released in May last year, revealed that 10 per cent of carers were over 75 years old themselves. Another 20 per cent were between the ages of 60 and 74. A large proportion (55 per cent) were between 45 and 59. Only 14 per cent of carers were younger than 44 years.

In other words, the old are not sitting on rocking chairs. Rather, they are contributing to the economy. The only difference is that this care service and unpaid voluntary work by the old is not included in Singapore's official gross domestic product (GDP) numbers.

The issue of intergenerational conflict also needs to be explored. A 2009 survey in Europe included a rather provocative question: "Are older people a burden on society?" The majority of people in 22 European countries disagreed. Sixty-two per cent of respondents disagreed strongly with this statement, with a further 23 per cent somewhat disagreeing.

Interestingly, it was older people themselves who were most likely to think they were a burden, with people aged 55 or over more likely than average to agree with the statement.

If we did a similar survey in Singapore and the results were comparable, then perhaps it would be necessary to focus more on convincing older people that they have a role in society rather than explaining this to younger generations. But the survey results might be different in Singapore due to the emphasis on Confucian values of filial piety. I hope that such a survey is carried out here so that we can then arrest any rise in intergenerational conflict.

Singapore now has a low-tax regime. According to academic Chia Ngee Choon, "the Government continues to be averse to raising revenues through taxes (which range from 12 per cent to 17 per cent of GDP, compared with the 34 per cent Organisation for Economic Cooperation and Development average)". Singapore has some leeway to raise taxes incrementally, and to create better social safety nets for the disadvantaged and needy old in ways that do not overburden younger workers.

In any case, an increase in tax to fund social safety nets for the old need not be an intergenerational zero-sum game. A subsidy for home care, for example, benefits not just the aged at home, but also working children who are relieved of the time and financial pressure of providing care.

Studies have shown that intergenerational solidarity is stronger in countries where a higher proportion of older people are working.

In Singapore, retirement is at 62, but seniors are offered re-employment until the age of 65. Many, however, continue to work in paid employment beyond that. According to the Singapore Workforce 2012 report, 52.6 per cent of men between the ages of 65 and 69 and 20 per cent of men over 70 are still in the workforce. The respective figures for women are 26.3 per cent and 7.4 per cent. In other words, the old remain an important labour source.

When experts talk about dependency ratios and higher taxes for the young, they are usually looking at only public goods, money and services. Private care and private funds are not captured. Many retirees care for grandchildren. Parents give money to their children to help them buy their first home or car. Many old people also leave an inheritance in the form of property, shares, CPF or savings.

When these private transfers are included, the advantage lies towards the younger generation. Therefore, even though there is a general feeling that the young are supporting the old, the reality is more nuanced.

The writer is a former Nominated MP and immediate past president of Women's Initiative for Ageing Successfully (WINGS).