Retirement and Re-employment (Amendment) Bill 2016 Second Reading Speech at Parliament

Mr Lim Swee Say, Minister for Manpower, Parliament

Introduction

1. Madam Speaker, I beg to move, “That the Bill be now read a Second time.” 
2. In 2012, we enacted the Retirement and Re-employment Act for our older employees to work beyond the retirement age of 62.
3. Under this Act, employers have to offer re-employment to eligible employees up to age 65.
4. If the employer is unable to do so, he has to offer an Employment Assistance Payment (EAP) to the employees to tide them through the period when they are looking for alternative employment.
5. One key feature of re-employment is that it need not be for the same job or on the same terms.
6. Both the employer and the employee can consult each other and work out mutually agreeable arrangements.
7. Both parties have the flexibility to make changes to the existing job arrangements to suit their needs.
8. Re-employment therefore balances the objectives of providing opportunities for employees to work longer on the one hand, while maintaining some flexibility for the employers on the other.
   
   Introduction of re-employment in 2012 has benefitted Singaporeans
9. This approach has worked well. The introduction of re-employment in 2012, coupled with the efforts from the tripartite partners to encourage age-friendly workplaces, has made a positive impact on the employment of older Singaporeans.
10. In 2015, over 98% of private sector local employees who wished to continue working at the age of 62 were offered re-employment.
11. 98% of those who accepted re-employment in the same job also did not experience any cut in their basic wages.
    
    An Ageing Workforce
12. Five years on from 2012, Singapore’s workforce continues to age.
13. Over the last decade, the proportion of residents aged 60 and over in our labour force has increased from 5.5% in 2006, to 12% in 2015¹.
14. As we live longer, we can expect this proportion to continue to grow.
    
    Key Changes in the Bill
15. Madam, the introduction of the re-employment age of 65 in 2012 was but a first step.
16. The intention to raise the re-employment age to 67 was already announced in 2012.
17. Since then, after extensive consultation and negotiation, tripartite partners have agreed that we are now ready to take this next step.
18. This Bill makes 3 key changes to the RRA.
    • First, the re-employment age will be raised from 65 to 67.
    • Second, we will introduce a new option to allow re-employment by another employer.
    • And third, we will remove the existing option of employers to cut wages of employees at age 60.
19. Madam, I will now elaborate on these 3 key changes in the Bill.
    
    Raise the re-employment age to 67
20. The first key change is that the re-employment age will be raised from 65 to 67 with effect from 1 July 2017.
21. Eligible employees – locals with at least satisfactory work performance, who are medically fit – should be offered re-employment until age 67.
22. The new re-employment age of 67 will apply to those who turn 65 on or after 1 July 2017; in other words, those born on or after 1 July 1952.
23. This is what tripartite partners agreed to after extensive consultations.
24. To encourage employers to re-employ employees beyond the re-employment age (65 today), the Government currently provides a 3% additional wage offset.
25. This scheme benefits around 120,000 Singaporean employees aged 65 and above every year.
26. This is on top of the Special Employment Credit of up to 8% for employing Singaporeans aged 55 and above.
27. This additional wage offset will expire on 1 July 2017.
28. The Government is studying the need and manner to further extend it to encourage voluntary re-employment of two groups of Singaporean employees.
29. First, those aged below 67 but not covered by the new re-employment age of 67.
30. Second, those beyond the new re-employment age of 67.
31. We are aware that older employees and their employers need clarity on the future of the scheme. A decision will be taken well ahead of the expiry of the current scheme.
    
    Allowing re-employment by another employer
32. The second key change is to allow eligible employees to be re-employed by another employer, to increase options for both the employers and employees.
33. Madam, we have received feedback from employers who were unable to find suitable jobs in their own companies for their workers.
34. Some of these employers would like to help their older employees secure re-employment with another employer.
35. However, today’s law does not allow them to transfer their re-employment obligations to another employer.
36. From 1 July 2017 onwards, the law will allow an employer who is unable to offer a suitable position in his own organisation, to transfer his re-employment obligations to another employer.
37. This change will benefit all three parties.
38. The original employer will be deemed as having fulfilled his re-employment obligations.
39. The employee will have more opportunities to be re-employed, and will enjoy re-employment protection under the second employer.
40. The second employer will likewise benefit from hiring an employee with experience.
41. There will be safeguards put in place to protect these employees.
42. The employee has to agree to the re-employment terms with the second employer, and the second employer has to agree to take over all applicable re-employment obligations for this employee.
43. If either condition is not met, the original employer still has to fulfil his re-employment obligations.
44. This means that the original employer still has to offer EAP if he cannot find a job for the older employee in his own company.
45. To prepare employers and employees for these changes, we have worked with tripartite partners to revise the Tripartite Guidelines on the Re-employment of Older Employees.
46. In particular, we added a new section on re-employment by a new employer to provide guidance on this new option.
47. My Ministry will be issuing the revised Guidelines later today. This will take effect from 1 July 2017.
48. Employers and employees who require more information may direct their queries to the Ministry of Manpower, the Singapore National Employers Federation or the National Trades Union Congress.
    
    Remove option of employers to cut wages at age 60
49. Madam, the third key change is to remove an existing employer option to cut employees’ wages at age 60.
50. In 1999, this option was introduced to help employers with seniority-based wage systems to manage costs when the retirement age was raised from 60 to 62.
51. Since then, with the restructuring and re-shaping of Singapore’s economy, tripartite efforts have been successful in moving employers away from seniority-based wage systems.
52. In 2011, 98.5% of companies with employees aged 60 and over did not reduce wages of employees at age 60.
53. Hence, tripartite partners have agreed to remove this option for employers with effect from 1 July 2017.
    
    Helping older employees work as long as they are willing and able to
54. Madam, tripartite partners have had extensive consultations on how to build on the existing re-employment model, to enhance job opportunities for older employees while balancing the need for flexibility for employers.
55. This Bill is the result of tripartite efforts over the last few years to strike this delicate balance.
56. We recognise that there are older employees in all sectors and occupations, with different circumstances and needs – therefore, not all of which can be addressed by this Bill.
57. We will therefore continue to work closely with our tripartite partners to continue to enhance employment opportunities for older workers and to build age-friendly workplaces in Singapore.
58. Madam Speaker, I beg to move.