Economists address Elon Musk's claim that Singapore is 'going extinct' amid low birth rate

The oft-discussed issue of Singapore's low birth rate was recently flagged by Tesla chief executive Elon Musk who declared that the Republic is "going extinct", with fewer babies being born in the country.

Musk was responding to a post on X which referred to Singapore's low birth rate, shrinking labour force, and its attempts to combat its population woes by having robots plug labour gaps.  

He wrote: "Singapore (and many other countries) are going extinct." 

The country's resident total fertility rate fell to a historic low of 0.97 births per female in 2023, down 6.7 per cent from 1.04 births per female in 2022, data from the Department of Statistics showed.

The Tesla CEO recently highlighted South Korea's low birth rate, saying that two-thirds of the population could disappear every generation.

As Singapore continues to grapple with a low birth rate and an ageing population, CGS International economic adviser Song Seng Wun said: "Musk is not wrong… Academics have been saying for years that if left as is, if the ageing population problem is not addressed, people delaying marriage and delaying starting families will have implications on the resident citizen population."

Singapore has raised government-paid paternity leave, taken steps to ensure that childcare is available and affordable, ramped up the supply of HDB Build-To-Order flats, among various measures.

Productivity, robots and immigration

OCBC chief economist Selena Ling noted that the issue of people marrying later and having fewer offspring is by no means new, and is also a global phenomenon.

She added: "The bigger question is whether we can continue to supplement (the shrinking workforce) with foreign talent and generate sufficient productivity gains to support sustained growth."

Song said that as economic growth concerns both productivity and labour growth, a slowdown in the latter in a shrinking population must be compensated by increased productivity. 

Labour-intensive areas of the economy such as hospitality and food and beverage will likely suffer more than sectors that can be more easily mechanised, such as manufacturing, he noted.

The argument can be made that more machines can be used to plug labour gaps, Song added. "Singapore is one of the most expensive places for manufacturing, yet we still attract a sizeable amount of manufacturing investment in chemical manufacturing and food manufacturing, which are machine-heavy."

But while technology and automation can step in to fill some gaps, they may not be able to completely replace humans. Sectors such as manufacturing would still require engineers, and while one could be served coffee by a robot barista, many may still prefer human servers. 

"Every sector that needs labour will be impacted… Singapore's statistics make it clear why we need foreigners," said Song. 

Striking a balance between population problem and quality of life

Ling noted that the challenge is a multi-faceted one that involves lifestyle aspirations as more couples are delaying marriage and childbirth to pursue their careers or other goals such as being able to travel.

"[It is] not a problem that throwing money per se can solve," she said.

Song observed that, while the issue of Singapore's ageing population stands to have an impact on its citizens, many are indifferent to it given that it does not affect them immediately or "personally on a day-to-day level". 

Issues that tend to weigh more heavily on people's minds relate to the overall quality of life rather than the "needs of the country 50 years from today", he added. That includes infrastructure upgrades, costs of living, housing issues, the regularity of train services and the crowd in public transport, according to him.

Hence, policymakers must strike a balance when tackling Singapore's ageing population issues by ensuring that people remain "generally satisfied" with their "overall quality of life", Song said.

However, there are advantages to having a small population size, he continued.

"The good thing about having a small, tiny population is that policymakers and people can interact quickly and swiftly." 

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This article was first published in The Business Times. Permission required for reproduction.