Adjustments help seniors stay employed
Adjustments help seniors stay employed
- The Straits Times, 29 May 2010
We thank Madam Ee and Captain Dir for their views on the CPF contribution rates for older employees.
2. While Singapore has seen the employment rate of older residents aged 55 to 64 rise from 43% in 1999 to 57% in 2009, it is still significantly lower than the overall employment rate of 76% for all age groups. We have introduced various measures to improve the ability of older workers to stay employed.
3. In our labour market, wages still contain significant elements of seniority-based pay, where wages increase automatically with age regardless of workers' productivity and performance. This may result in older workers becoming less competitive. Some wage adjustment is therefore necessary in order to maintain the employability of workers as they age.
4. Singapore's approach is two-fold. Firstly, an adjustment through the CPF contribution rates for older workers, which applies to all firms across the board. Secondly, allow employers to adjust the salaries of their workers as they reach age 60. However, employers should not do so automatically but should take into account the ability and performance of their workers, as well as other relevant factors. In addition, since 2007, the Workfare Income Supplement (WIS) has also helped to boost the annual income of older low-income employees and make up for the lower CPF contribution rates.
5. MOM will continue to work with the tripartite partners to enhance the employability of older employees, through training, skills upgrading and job redesign. This will reduce the element of seniority-based pay in wage structures, and hence reduce the extent of wage adjustments that older workers will face.
CPF cuts a contradiction
- The Straits Times, 26 May 2010
'Cutting contributions as one ages goes against the grain of helping a person remain as independent as possible in old age.'
To me, the reduction in Central Provident Fund (CPF) contributions as an employee grows older has always been baffling. I came to Singapore in 1992 on an employment pass. The effect of Singapore's efficiency, honest governance, quality of education, life and security quickly convinced me to set up hearth and home here, and I changed the colour of my passport from blue to red.
My family and I have had no reason to regret our decision, bar the baffling contradiction when it comes to senior citizens. On the one hand, we focus on respect to elders, value the wisdom age imparts and make resolutions to support the old and infirm through various programmes. Yet, on the other hand, we take away something which will help that person in old age and in being independent.
While I understand the practicality in ensuring that each citizen provides for himself in old age rather than depend on government welfare, cutting CPF contributions as one ages goes against the grain of helping a person remain as independent as possible in old age.
Cuts based on age, which is not a reasonable factor
- The Straits Times Online, 22 May 2010
Thursday's joint reply by the Singapore National Employers Federation, the Ministry of Manpower and the National Trades Union Congress ('Less than 3% of private firms cut older workers' wages') noted that the Retirement Age Act is clear that a pay cut should be based on 'reasonable factors', and age is not one such factor. If that is so, why is an employer's share of the Central Provident Fund (CPF) contributions for his employees cut three times in the working life of an employee: at age 50, 55 and 60?
The cut is significant: from 14.5 per cent to 10.5 per cent at age 50; from 10.5 per cent to 7.5 per cent at age 55; and from 7.5 per cent to 5 per cent at 60. So, in the space of 10 years, older workers suffer in effect a hefty pay cut of 9.5 percentage points. These cuts are based on age, which is not supposed to be a reasonable factor.