The Singapore of the future is small and rich

In a government poster from the early 1970s, a young Singaporean mother stands in a laundry-strewn apartment with a screaming infant on her hip. Her toddler is on the floor wailing and her husband stands disapprovingly in the doorway, disgusted by the messy home. A thought bubble appears above the woman's head: "If only I hadn't married so early." The message was part of a campaign to discourage teenage weddings and large families.

When Singapore became independent in 1965, the average mother had at least four children. Lowering the birth rate was considered vital to eradicating poverty, boosting education and healthcare, and moving much of the population from crowded shop houses to affordable public housing — the tenets of founding Prime Minister Lee Kuan Yew's vision for the city-state. Survival depended upon family planning.  

Half a century later, Singapore is very different. After falling steadily for years, its total fertility rate, the number of children a woman has over the course of her lifetime, slipped to a record low of 1.1 in 2020, according to official figures. (A rate of 2.1 is considered the requirement to keep a population steady.) The government now offers baby bonuses worth as much as S$10,000 ($7,430), and the cost of reproductive technology treatment is heavily subsidized. Late last year, Deputy Prime Minister Heng Swee Keat foreshadowed further incentives.  

The government's latest preoccupation with child-rearing could be interpreted as an attempt to address an overcorrection. It also rests on the premise that more people will boost growth. But this view skates past a certain inevitability: Singapore's economic star was destined to fade long before its demographic challenges manifested. 

In a 1994 essay in "Foreign Affairs," Paul Krugman noted that the so-called tiger economies of East Asia were benefiting from a rare surge in the workforce and investment, which would eventually dissipate. In Singapore, per capita income roughly doubled every decade between 1966 and 1990 and gross domestic product rose 8.5% a year, according to Krugman. The share of the population that was employed and the number of people who received secondary education rose dramatically. "Even without going through the formal exercise of growth accounting, these numbers should make it obvious that Singapore's growth has been based largely on one-time changes in behavior that cannot be repeated," he wrote.

The most obvious way to mitigate such decline — more immigration — has met periodic resistance. Historically, the country embraced workers from abroad, who either brought specific skills required by multinational companies or perform roles that don't excite locals. (A big chunk of foreigners work in construction and food-and-beverage industries.) Amid the Covid-19 downturn, however, ministers have emphasized the need for employers to preserve the "Singapore core." This attention to domestic sensitivities has been amplified since the general election in July, when the opposition picked up seats in parliament. 

You could argue this has always been a latent concern: "Singaporeans have strong reservations about admitting immigrants," Lee wrote in his book "One Man's View of the World," published in 2013, "but we arrive at this option almost by process of elimination.'' He continued: "Do we face up to reality and accept that some immigrants are necessary, or do we simply allow Singapore to shrink, age and lose vitality?" 

Yet demographic challenges don't necessarily spell economic hardship. Japan's population is contracting and aging simultaneously. Despite the caricature of the country as an economic failure in the grip of terminal decline, life goes on. True, growth in overall GDP has been fairly anemic in past few decades, but GDP per capita has held up well. Businesses continue to invest and, prior to the pandemic, Japan began to tentatively embrace immigration as part of the solution to population retreat, as I've written. What's more, the unemployment rate is low — before the pandemic, around 2.2% — and even the ravages of Covid-19 haven't pushed it much higher than 3%. Prior to the coronavirus, there were multiple jobs in Tokyo for every applicant.

There's also hope in greater use of robots and automation. Androids have been more visible across Singapore over the past year, from a mechanical dog called Spot that patrolled a popular park to monitor social distancing, to a robot barista and cute machines that help clean hawker centers. But it's unclear, given the premium now placed on social harmony and protecting jobs, whether the country will go for en-masse deployment of robots anytime soon. In a nod to both technological aspirations and labor-market constraints, officials announced in November a new category of visa for people with a proven track record in this field.

Singapore's strategy for decades was marketing itself as an efficient, well-regulated and impeccably maintained first-world island — a place that would stand out in a region renowned for sky-high growth rates but beset by straining infrastructure and political volatility. Generations of visitors have marveled at the user-friendliness of its airport, roads and port facilities. Many chose to root their businesses here. 

To a large extent, smaller families are a byproduct of all this prosperity. Unlike the family in the 1970s-era poster, both parents tend to work these days. Locals complain about stress, a national ethos that emphasizes professional advancement, and the pressure to get their child into good high schools and the National University of Singapore. Almost every street corner has a business offering extracurricular tutoring in math, science and English. "The tiger mom concept is so rampant here," said Anu, a 40-year old who works in public relations and has one child, lamenting the anxieties parents and children face.

For an updated understanding of modern family friction, a more instructive exercise would be to camp out at the Forum mall on Orchard Road, one of the country's most iconic streets. On a Sunday afternoon, you can join throngs of families shuttling one or two kids between ballet, music, Taekwondo and gym classes while trying to avoid vegan ice cream shops and the Toys "R" Us store on the third floor. Singaporeans may be content with fewer kids, but they're sure ready to spend a lot on them. Welcome to the smaller, richer future.

Daniel Moss is a Bloomberg Opinion columnist covering Asian economies. Previously he was executive editor of Bloomberg News for global economics, and has led teams in Asia, Europe and North America.

Disclaimer: This opinion first appeared on bloomberg.com, and is published by special syndication arrangement.