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Speech by Dr Amy Khor, Senior Minister of State for Health and Manpower in reply to the Motion for The Adjournment on Employment and Employability of Seniors Raised by MP David Ong

  1. Madam Speaker, I thank Mr David Ong for raising this topic and for his various suggestions. The challenges faced by our ageing workforce remain a top priority for my Ministry and our tripartite partners.
  2. I will highlight two key strategies we adopt which address some of the issues Mr Ong has raised:

    Strategy 1 - Expand Employment Opportunities for Older Workers
  3. Mr Ong proposed removing the retirement age and giving our older workers the choice to work longer. The current minimum statutory retirement age of 62 in fact protects workers from below 62 from being dismissed on the grounds of age. It is not meant to, and it does not impede people from, working beyond 62. In fact, there is no statutory age at which employers must retire a worker.
  4. We did consider various options, including extending the statutory minimum retirement age or removing it altogether. We also studied the approaches taken by other developed countries, and concluded that re-employment is a better and more practical approach for us. Re-employment allows workers to work longer, which is what Mr Ong is calling for, while ensuring that employers have sufficient flexibility to manage their manpower needs. We should be mindful that requiring employers to continue employing their older workers without providing them the flexibility to manage their business needs, would not be in the best interests of the workers.
  5. We adapted the re-employment approach from Japan, which introduced re-employment in 2006. Today, Japan is one of the countries with the highest employment rates for older workers.
  6. We therefore enacted the Retirement and Re-employment Act, or RRA in January 2012. Employers are required to offer re-employment to their workers from age 62 to 65. The bar for re-employment is deliberately kept low. The employee needs to have satisfactory work performance and be medically fit. Employers have the flexibility to make some adjustments to the employment terms for these employees, based on reasonable factors such as employee’s productivity, duties and responsibilities, and the extent of seniority elements in the wage structure. Overall, this allows older workers to work longer without affecting their employability.
  7. The implementation of the RRA has been smooth since it came into effect. In particular, re-employment rates have been high. Based on our 2012 survey, 98% of local employees who turned 62 in the year ending June 2012 were offered re-employment. This included 70% of retiring employees who were offered re-employment on existing contracts without any change in employment terms.
  8. Among those who accepted re-employment on new contract in the same job, three in four retained their basic wages. Including those who continued on existing contracts, 94% experienced no change in their basic wages.
  9. Re-employment disputes have also been low, numbering two to three cases a month.
  10. The RRA has been in effect for only 2 years. We should allow time to monitor its impact. The Tripartite Committee on Employability of Older Workers continues to closely monitor the implementation of the RRA, with a view to further extending the re-employment age, possibly to 67, at an appropriate time.
  11. With regard to the re-employment policies in the Civil Service, from 1 August 2013, Div III and IV officers who typically perform clerical and front-line operational duties were offered re-employment at the same grade and salary. Div I & II officers, who are managers and executives, will only experience an adjustment if their salaries are above a pre-determined maximum-minimum ratio that is reflective of the typical competencies, duties and responsibilities required of their jobs. Any adjustments will not be more than 15%.
  12. I agree with Mr Ong that it is crucial to help employers redesign jobs and the work environment to adapt to the ageing workforce.
  13. We encourage employers to tap on the generous funding available under WorkPro to do so. Since WorkPro was launched in April 2013, more than 600 companies have received the age management grant to implement age-friendly practices. We will continue to promote awareness of these schemes.
  14. We also encourage older workers to continue to train and stay at work through the Workfare Income Supplement (WIS) scheme and its enhancements. In 2013, we expanded the WIS eligibility criteria and increased the maximum WIS quantum by 25% to $3,500. We also increased the cash proportion of WIS payouts to 40%. WIS payouts today can make up to a third of a worker’s monthly income. To date, about 360,000 Singaporeans have received more than $400 million in WIS for work done in 2013.

    Enhance Retirement Adequacy
  15. Mr Ong suggested that older workers should enjoy similar CPF contribution rates as their younger counterparts to help them save more. While we want to help older workers accumulate more CPF savings, we have to balance this with their continued employability.
  16. CPF contribution rates were lowered for older workers when the retirement age was raised in the past so as to address employers’ cost concerns because of the prevalence of seniority-based wages. The tripartite partners have since made good progress in narrowing the wage scales. The employment rate of older residents aged 55 to 64 has also increased significantly from 47% in June 2004 to 65% in June 2013.
  17. In September 2012, we made a first step increase in CPF contribution rates for older workers aged 50 to 65. Concurrently, the Government enhanced the Special Employment Credit (SEC) to mitigate the impact of the CPF increases on the employability of older workers above age 50. Since 2011, about 107,000 employers who employed 470,000 older workers benefitted from more than $760 million of SEC. More than 90% of workers whose employers received SEC in the first half of 2012 have remained employed one year later.
  18. We agree that it is timely to review the CPF contribution rates for older workers. We announced in 2012 that we will equalize the contribution rates for workers aged 50 to 55 with younger workers aged 50 and below and we remain committed to do so. However, we should approach this carefully and gradually so as not to adversely affect their employability.
  19. We are monitoring the employment situation of older workers and are consulting our tripartite partners on whether and when to take the next increase.

    Strategy 2 – Shape Positive Perceptions towards Older Workers
  20. Our second strategy is to shape positive perceptions towards older workers. The key lies in changing social attitudes and dispelling prejudices against them.
  21. Schemes such as WorkPro and SEC are already in place to inculcate positive mindsets. We have also been working closely with employers and the unions for the adoption of fair, responsible and merit-based employment through the Tripartite Alliance for Fair Employment Practices or TAFEP. Employers are persuaded to not restrict recruitment opportunities to individuals of certain age groups, and to base their selection on objective criteria such as the candidate’s ability to perform the job.

    Conclusion
  22. Madam Speaker, addressing an ageing workforce is an ongoing task and Mr Ong is right to point out that it is an important one. I urge everyone to make every effort to stamp out ageist mindsets and treasure the cumulative knowledge and experience of our seniors. Meanwhile, as the labour market remains tight, we will continue to incentivise employers to tap on older workers. Over time, through a mix of promotion and legislation, we hope to nudge society as a whole, and employers in particular, to recognise older workers as a valuable asset in our workforce, rather than a liability.
    Adjournment motion on the Employment and Employability of Seniors by MP David Ong