Combined Oral Answer to PQ on Retrenchment of Senior Workers
NOTICE PAPER NO. 2078 OF 2023 FOR THE SITTING ON OR AFTER 3 AUGUST 2023
QUESTION NO. 4959 FOR ORAL ANSWER
MP: Mr Vikram Nair
To ask the Minister for Manpower (a) how many workers over the age of 63 years have lost their jobs in retrenchment exercises in the last five years; and (b) whether a higher proportion of workers in this age group have lost their jobs as compared to other age groups.
NOTICE PAPER NO. 2078 OF 2023 FOR THE SITTING ON OR AFTER 3 AUGUST 2023
QUESTION NO. 4960 FOR ORAL ANSWER
MP: Mr Vikram Nair
To ask the Minister for Manpower (a) what is the rationale under the Tripartite Guidelines for Fair Employment Practices for workers who are losing their entitlement to retrenchment benefits to be entitled only to Employment Assistance Payments upon reaching the age of 63 years old; and (b) whether the guidelines can be amended to reduce a 'cliff effect' in the drop in retrenchment entitlement for long-serving workers upon turning 63.
Answer:
1. Mr Nair has filed two Parliamentary Questions relating to retrenchment of senior workers. Mr Speaker, with your permission, I will respond to these related questions together.
2. First, the data shows that workers who are past the retirement age are not disproportionately affected by retrenchment compared to other age groups. From 2018 to 2022, the average incidence of retrenchment among residents aged 63 and over was 3.8 per 1,000 resident employees, lower than the overall figure of 6.1 for the entire resident workforce. Over the same period, the absolute number of retrenched residents aged 63 and over remained low, at an average of 450 per year.
3. The Retirement and Re-employment Act requires employers to offer re-employment to employees above the prevailing retirement age and below the prevailing re-employment age, or else employers will need to pay eligible employees the Employment Assistance Payment (EAP). The recommended EAP amount in the Tripartite Guidelines on Re-employment of Older Employees is carefully calibrated. The EAP should not be so low that it provides employers an easy alternative to offering their employees re-employment. However, if the EAP is too high, it may deter employers from hiring or retaining senior workers nearing retirement age in the first place. The EAP quantum is tied to the legal obligation to offer re-employment and should not be compared to retrenchment benefits, which are not mandated by law.
4. The quantum of retrenchment benefit is usually stipulated in the employment contract or is negotiated in a collective agreement between unions and companies. It thus varies across companies, though the vast majority of employers do follow the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment in paying retrenchment benefit, generally paying between 2 weeks to 1 month of salary per year of service, to eligible employees. In some cases, there is agreement between the union and the employer to scale down the quantum of retrenchment benefit payable as the worker nears the statutory retirement age. Any real or perceived “cliff effect” between retrenchment benefit and EAP is dependent on the quantum of retrenchment benefit specified in the individual worker’s employment contract or collective agreement.
5. The Ministry of Manpower (MOM) will continue to work closely with the tripartite partners to review our retirement and re-employment policies to ensure they remain relevant and foster progressive workplaces that enable our senior workers to continue working if they wish to.