Singapore braces itself for a massive drop in workers

Labour supply growth could fall by 2.5 ppt in 2027 to 2036.

Singapore is facing a new problem with its declining workforce.

Oxford Economics said in a forecast that Singapore will face a massive decline in its working population.

Oxford Economics head of Asia economics Louis Kujis commented, "Policy measures to boost labour participation rates limit the impact of the region’s larger demographic trend on labour supply growth, but they typically cannot fully offset it."

The institution said a negative shift in the 20 years will be large for Singapore and nearby countries South Korea and Taiwan.

Negative impact on labour supply growth could reach 2.5 ppt in 2027 to 2036.

Oxford said it could be brought about by the new restrictions on foreign workers.

Limitations on foreign workers could harm companies with labour shortages and increased labour costs.

"With the demographic challenge looming on the horizon, Asian economies better start preparing," Kujis said.

Moreover, Oxford Economics said the recent labour market conditions could limit consumer spending. Household spending barely rose by 0.1% in Q2.

Background figures also proved to be weak with the rising conditions.

The 2.2% unemployment rate in Q2 looms near the highest records in seven years.

With inflation back to expansion, real earnings also only grew 1.9% YoY in Q1 against the 3.7% rate last year.

Falling house prices have also shown negative wealth effects, Oxford Economics added.

"Better employment conditions and additional fiscal support should lead to a recovery in spending. But the recovery in consumer spending is likely to be bumpy," Oxford Economics said.