Mercer together with Marsh & McLennan Companies’ Asia Pacific Risk Center (APRC) announced the findings of its latest report "Aging Workforce: Cost and Productivity Challenges of Ill Health in Singapore". The report reveals that the aging workforce and medical cost inflation in Singapore are projected to drive up average medical costs per employee by 108% to S$1,973 per year in 2030, representing a mounting financial burden for employers.

The segment of Singapore employees aged over 50 is projected to increase by 55%, and to represent 40% of the workforce by 2030. With an increase in demand for medical services, the aging demographic will contribute to 41% of the escalation in medical costs, as it will drive a rise in the utilization of healthcare services, which together with healthcare cost inflation, will result in a significant surge in overall costs.

"With improved management of health conditions permitting individuals to stay in the workforce longer, increasing financial needs in retirement, as well as more flexible employment options, such as working from home, and on-demand jobs in the gig economy, there is a growing trend for Singapore employees to postpone their retirement," said Neil Narale, Singapore Business Leader for Mercer Marsh Benefits. "However, health risks increase with age, ranging from diminishing motor and sensory functions to a greater incidence of chronic diseases, which will create challenges for employers."

In Singapore, societal aging is estimated to drive the prevalence of chronic diseases such as cancer and diabetes by up to 200% by 2030, which means Singapore will face the challenges of stagnating productivity growth through increasing rates of absenteeism and presenteeism.

Based on current trends, productivity loss due to sickness absenteeism per employee is projected to increase by 25% based on GNI (gross national income). With an aging workforce, at the national level this represents a cost of S$3.3 billion in 2030, a 43% increase from 2016.  The three main drivers of this are (1) the aging of the workforce, which leads to an increase in sick days, (2) a larger workforce, and (3) the GNI per capita growth rate.