Re-employment More Effective

• The Straits Times (22 January 2011): Re-employment More Effective
• The Straits Times (18 January 2011): Make sure rehiring process is fair

Re-employment More Effective
- The Straits Times, 22 January 2011

The recent editorial (“Make sure rehiring process is fair”, Jan 18) suggested that mandating a higher retirement age would be more effective than re-employment legislation in improving the employment rate of older residents. The tripartite partners had carefully considered both options. Simply raising the retirement age would be easier to implement but it will increase rigidity in the labour market; and may not improve the employment rate of older employees. Legislating re-employment is thus the more practical approach as it provides employers and employees the flexibility to make adjustments to employment terms and conditions to meet their respective needs. This encourages employers to retain older employees, and hence improves their employment rate.

2.   The editorial also gave the impression that the Retirement and Re-employment Act gives employers “wide latitude” in deciding eligibility for re-employment. When it takes effect from January 2012, the Act only allows employers to use two criteria - satisfactory job performance and medical fitness - in assessing an employee’s eligibility. In cases of dispute, the onus is on the employer to show proof that an employee is ineligible for re-employment. Employers may also refer to the recently updated Tripartite Guidelines on Re-employment of Older Employees which outlines how re-employment should be implemented.

3.   MOM already has a dispute resolution mechanism in place for re-employment disputes; hence there is no need for a “dedicated grievance unit” as suggested. In the process of implementing re-employment, employers and employees who encounter disputes may approach the Ministry for advice or assistance.

4.   The tripartite partners remain committed towards working together with employers and employees in preparing them for the re-employment legislation.

Make sure rehiring process is fair
- The Straits Times, 18 January 2011

There is a year's preparatory phase before the re-employment law passed last week takes effect. The hope must be that employers will get cracking on implementation modes that will meet the long-term policy objective of keeping older workers active for as long as they are fit, while companies evaluate their cost competitiveness in light of the new law. Both attributes are crucial to a proper working of Singapore's value-add economy. Hence, the flexibility granted on workplace decisions when it would have been simpler to just raise the retirement age from the present 62 years. The employment rate of older workers aged between 55 and 64 rose from 46.8 per cent in 2005 to 59 per cent last year, according to available employer data. The Workfare scheme may have been a reason, as much as firms' need for older local service workers to augment the foreign work-permit input. But there is no reason to suppose the workforce rate of the old will keep rising, unless a higher retirement age is mandated.

One has to be practical, regardless of the law's equitable intent. The Retirement and Re-employment Act gives employers wide latitude in deciding eligibility for rehiring. If economic conditions are favourable, many workers who satisfy the twin criteria of health and job performance can expect to be retained. When a precipitate downturn occurs, employers with an eye on containing costs and raising productivity will start paring senior ranks even if costlier oldies are useful. Boom-bust cycles that are getting ever shorter (the last one seemed long ago, in 2009) can play havoc with this law.

Subsidiary legislation that periodically could be tacked on to the Act should be precise, where feasible, to protect workers from arbitrary evaluations on suitability. The debate in Parliament heard some plausible scenarios of abuse. One such is resort to the one-off Employment Assistance Payment as a cheaper option: two young workers could be had for the price of keeping a 62-year-old. Companies also have the advantage of cutting pay at age 60, if they choose to.

Although reports of unfair treatment can be made to the minister, the Manpower Ministry should consider setting up a dedicated grievance unit to rule on complaints in the first year or two of the Act's implementation. This will communicate a clear message that it is in the interests of firms to want to make the policy work. Over time, it would be good if employers in industries where age is no bar to productive work should institute their own retirement age without official prompting. This could go beyond the 65 years that the new employment law effectively has set.