Opening Remarks at Tripartite Collective 's event "30 Years of Developing Sustainable Retirement & Re-employment Policies"

Dr Koh Poh Koon, Senior Minister of State for Manpower, Paradox Singapore Merchant Court

Mr Heng Chee How, Deputy Secretary General, NTUC
Mr John Ng, Vice-President, SNEF
Mr Bob Tan, Deputy Chairman, TAL
Professor Chia Ngee Choon, NUS
Tripartite sisters and brothers, distinguished guests, ladies and gentlemen.

Introduction

1. It gives me great pleasure to join you at today’s Tripartite Collective event – where we will take a journey down memory lane to look at the milestones of our retirement and re-employment policy journey, which have fundamentally shaped the senior employment landscape in Singapore. Unfortunately, I wasn’t around for the last 30 years on this journey, but I think it’s a journey worth recounting as we try to chart our way forward for our ageing population. By now, everyone knows that in Singapore, our population is ageing rapidly. We have one of the fastest ageing population in the world. For a country that relies primarily on human capital as its most important resource and asset it is  a fundamental challenge and has wide implications - in terms of how we can continue to achieve good economic growth, how we ensure that our workers continue to have good jobs and incomes, and how we will take care of each other as the population in general becomes older. 
2. As the population becomes older, many of us will have aged parents to look after. In time to come, the burden on the young will increase as well. This is not a new problem or a recent development. In fact, we started working on this issue many decades ago. Some of you might not be aware that the minimum retirement age of 60 was legislated only 30 years ago, in 1993. Before that, workers typically adhered to the colonial practice of retiring at 55 years old. Today, 55 is like the new 40 right? But 30 years ago, it seemed like at 55 it was time to retire, partly because the life expectancy then was much shorter. Now, the retirement age has been raised to 63 years old, and we also require employers to re-employ their workers up to 68 years old. Through much discussions, tripartite partners agreed that these will be raised to 65 and 70 years old respectively by 2030.  How did our retirement policies evolve over the last three decades, and what did it take for us to get to where we are today? I am glad that Prof Chia Ngee Choon has helped us to put together a detailed case study that records the key milestones of Singapore’s retirement and re-employment journey. I wish to highlight a few key points from our tripartite journey.
3. First, the why. In the 1980s, as we were recovering from a recession and amidst a tight labour market, tripartite partners started thinking about how to better tap on the silver workforce. Today, the need to do so is even more pressing and acute, and tripartite partners understand this very well. While seniors comprised 1 in 6 Singaporeans in 2020, those aged 65 and above will increase to 1 in 4 by 2030.  Our seniors are living longer and many remain in good health, where they can continue to contribute their experience, skills and networks to the economy and society. Many who are in good health and are able-bodied would want to continue working not just for income but to maintain mental and social engagement. When I was in practice, many patients told me that the moment they stopped social engagement or working, they declined very fast. So we must continue to support them with opportunities to do so, rather than solely relying on foreign manpower to bolster our labour force to sustain our economic growth.
4. Second, the how. The journey has not been easy and required compromises among tripartite partners. But this was possible because we shared a common long-term vision. We wanted to create an environment where employers are able to productively tap on the silver workforce, and seniors are able to continue working if they wish to, so that they can stay meaningfully engaged, while earning reasonable incomes and improving their retirement adequacy. Back in the 80s and 90s when we first considered how to extend the productive longevity of our senior workers, we studied the Japanese model carefully. They were also facing the challenges of an ageing population, even more so than us. We also consulted widely with employers and union leaders, and finally introduced the Retirement Age Act in 1993, legislating that the retirement age cannot be lower than 60. This was the landmark policy that allowed us to push the retirement age beyond the traditional age 55. This effort required extensive work and collaboration by our unions to prepare workers psychologically to accept the idea of working beyond age 55. It is not an easy task and required a lot of ground engagement by our unions to convince workers that it is in their interest to do so. Employers also had to accept higher manpower costs, given that seniority-based wages were prevalent, with older workers earning as much as three times of what a young entry worker earned for the same job.
5. Further attempts to raise the minimum retirement age became more difficult, as employers were increasingly concerned about wage costs that they would have to bear. We managed to raise it to 62 in 1999. Employers understood the need to extend the minimum retirement age of workers. But unions also had to accept that we must allow employers to reduce wages for senior workers aged 60 and above, to help manage costs. There was a need to strike a balance between what employers were prepared to bear and senior workers continuing to get job opportunities. Once again, the spirit of tripartism prevailed, where we managed to balance the needs of both employers and workers so that we can do what is right and necessary for everyone’s common interests. In the mid-2000s, tripartite partners again made several trips to Japan to learn how they applied the idea of re-employment to address the cost concerns related to hiring senior workers. 
6. Around 2007, we announced plans to introduce re-employment in Singapore. We spent five years explaining the concept to employers and workers, and negotiating implementation details, before legislation came into force in 2012 to set a maximum re-employment age of 65. This means that employers would now be obliged to re-employ workers beyond the retirement age, up to the re-employment age. In return for employers’ support, unions accepted that employers should have the flexibility to adjust contracts and job scopes for re-employed workers, including reasonable wage reductions. This enabled senior workers to continue working longer, while allowing employers to manage business costs. We had to consult and think through implementation details carefully, as the success of the policy depends critically on how well employers and unions understood and executed their roles and responsibilities. This is because job scopes and business models are diverse, and there is no one-size-fits-all strategy or method to meet the needs of both sides. To move forward together, both sides need to give and take and understand the trade-offs. For example, employers should discuss re-employment plans with their employees at least six months before they reached the retirement age, to ensure that there is proper manpower planning and to help everyone arrive at a mutually acceptable solution. At the same time, unions played a key role in socialising and educating workers on the need to be flexible and open-minded in discussing re-employment terms. These details were laid out in the Tripartite Guidelines on the Re-employment of Older Employees, which continues to be a key reference document today. Through strong tripartite support, we have kept disputes low, and workplace trust and harmony high.
7. In 2017, we further raised the re-employment age from 65 to 67 and removed the provision for employers to reduce wages when workers turn 60. You may ask, have employers’ cost concerns disappeared overnight? The answer is obviously no. Cost concerns will always be there, but this move was possible because for two decades before this, tripartite partners had worked hard to reduce the extent of seniority-based wage systems. The majority of firms had reduced the min-max ratio of salary bands from 3 times, down to about 1.5 times. The unions implemented this in their collective agreements, because they understood the longer-term goal is to help the workers stay employed and meaningfully engaged for as long as they are able and want to.
8. So, as you can see, throughout the years, this spirit of tripartite understanding and compromise has allowed our retirement and re-employment policies to remain practical and sustainable. The foundational work done and the trust built over the decades has allowed us to extend the productive longevity of seniors to benefit both employers and the workers themselves.
9. More recently, the Tripartite Workgroup on Older Workers made recommendations in 2019 to raise the retirement and re-employment ages further, to 65 and 70 respectively by 2030. We are a few years away and I think we are making good progress. To support employers’ extended obligations, the Government introduced the Senior Employment Credit, which provides wage offsets to employers who hire senior workers. We also rolled out the Part-time Re-employment Grant to encourage employers to offer part-time re-employment options to senior workers. Because not all senior worker want to work on a full-time basis. In this year’s COS, MOM also announced measures to uplift workers and boost their retirement adequacy, such as increasing CPF contribution rates for senior workers, as well as enhancing the Workfare Income Supplement scheme which has benefitted about 1 million lower-wage Singaporeans since it was established in 2007. We will also be introducing the Majulah Package Earn and Save Bonus which will provide annual CPF bonuses to eligible Singaporean seniors who continue to work.
10. Looking back, I would say the tripartite journey has been challenging, but worthwhile, because it has borne fruits. Our employment rate for seniors aged 55 to 64 has risen from 38.8% in 1993 to 70.0% in 2023. The employment rate for seniors aged 65 and above has more than doubled from 12.2% in 1993 to 30.6% in 2023. Today, about 98% of retired workers who are eligible for re-employment are re-employed. The numbers speak for themselves and show that the efforts of the tripartite partners in engaging both employers and workers along with the Government’s support schemes has helped senior employment to pick up significantly over the last three decades.
    
    Recognising the Efforts of Senior Workers and Employers
    
11. This brings me to my third point, which is that raising retirement and re-employment ages is only one part of the solution. Workers themselves must also take charge of their career health, plan ahead, and refresh their skills to adapt to changing workforce demands. We have introduced resources and programmes to empower workers to do so, such as
    1. the CareersFinder feature on the MyCareersFuture portal and career guidance under WSG’s Polaris programme, to help workers re-navigate their employment landscape and find jobs that suit them,
    2. as well as reskilling and upskilling programmes such as the Career Conversion Programme and the SkillsFuture Level-Up Programme.
12. It’s not just the workers who must have a mindset change. Employers must also be forward-looking and take active steps to implement progressive HR practices to support and extend the productive longevity of their senior workers and view their workers as a resource that they can grow and utilise. Many workers and employers have done so, and we recognise and thank them for their efforts. Let me cite a few examples, HDB set up a Company Training Committee (CTC) in 2019 to formulate and implement training initiatives aimed at helping older HDB officers stay ready, relevant and resilient. These included programmes to level up officers’ growth mindset and digital literacy and open up more upskilling and reskilling opportunities. One such officer is Senior Estate Manager Lim Ting Hui (林鼎惠) who joined HDB in 1979 as a Housing & Maintenance Inspector. By the time he reached retirement age in 2020, he had risen through the ranks to be a Senior Estate Manager. Upon re-employment, he took on an advisory role to develop on-the-job training programmes for HDB’s Estate Executives. When HDB re-organised its branches in 2022, Ting Hui continued to undergo training to reskill himself and took on a new role in the Car Parks Operations Team. This is an example of a worker who was prepared to be flexible to move into a new role, accept training and new skills and move with the needs of the organisation. It is also an example of an organisation that was prepared to redesign work for senior workers to contribute in their areas of strength.
13. Another example is that of Goodrich Aerostructures Service Center – Asia Pte Ltd, which is a leading aerospace supplier providing maintenance, repair and overhaul services of systems and components to major commercial airframers, engine manufacturers and over 100 airlines around the world. Goodrich built a strong partnership with the Singapore Industrial & Services Employees’ Union (SISEU) to support older workers in lifelong learning, retirement planning, re-employment, employees upskilling, and guides workers through digital transformation. The workers demonstrated enthusiasm and adaptability in embracing new technology and digitalization. Mr Chua Chee Ping, Mr Kwang Bee Huat, Mr Sardali Bin Sohani and Mr Raymond Tan are commendable examples of such employees who have been with the company for more than 20 years, underwent the company’s upskilling or reskilling programmes, and are now embracing technology and digital tools to complete their tasks with greater ease and higher precision. This shows that age is no barrier to adopting new skills. With the right mindset and willing employers and employees, we can achieve good outcomes for both parties.

    
    Tripartism: A Pillar of Harmonious Workplace Relations

14. Brothers and sisters, our operating environment, demographics and policies will change, but there is one thing that remains constant and it is our spirit of tripartism. In fact, it has become stronger, and I think it is time for us to use this to our advantage. Tripartism is the unique approach where the Government, unions and employers collaborate and arrive at win-win outcomes for all parties. It sounds easy on paper, and in Singapore we may have taken for granted that this is how tripartism works, but very few countries have managed to do so consistently.
15. I recall an incident at this year’s International Labour Organisation (ILO) Conference in Geneva. It is usually at the ILO Conference, where representatives from government, the unions and employers, will get the chance to speak to all the delegations across all the countries in the ILO. I remember this one day where an employer representative went up to the podium and spent his entire speech scolding his government and saying that the country’s union has not been helpful in helping them to weather the challenges. After he spoke, the union representative from the same country went up and started scolding the employers and the Government for not supporting workers and leaving workers behind. The atmosphere was a sharp contrast to how it is in Singapore, where our representatives calmly advocate for their views and speak kindly of our tripartite partners to show that if we work together, we can achieve a lot more. So Tripartism is not something to be taken for granted and is in fact a strength we have.
16. As mentioned at the start of my speech, our re-employment policies have evolved over the years and at every point, the tripartite partners were in it together – from policy design, to programme development and to stakeholder engagement. Raising the re-employment age required both employees and employers to shift from their status quo positions. The change can be unsettling to some, but the tripartite partners continue to engage the ground, addressing old and new concerns while assuring them of a better collective outcome. We are now facing new workforce and economic trends that lead to new challenges. We continue to be an ageing society, but the good news is that the profile of our senior workers is also changing. In 2020, 3 in 10 workers aged 55 to 64 had tertiary education. By 2030, this will increase to more than 5 in 10 workers. The profile for older workers of today and of the future is drastically different from yesterday. More seniors will be in PMET jobs and have better retirement adequacy with more CPF savings. Their aspirations will evolve. At the same time, the economic environment is also becoming more uncertain, and employers have to contend with geopolitical tensions, global competition for talent, and much shorter product and business cycles.
17. Our approach to support senior employment will need to similarly evolve, to cater to the needs and aspirations of our future seniors, and to support employers in harnessing the potential of a more educated silver workforce. We may be at the forefront of this global challenge. Many countries are also finding ways to grapple with these challenges, including Japan from whom we adapted our re-employment policy, but they have varying degrees of success. Instead of adapting other countries’ playbook, perhaps now is an opportunity for tripartite partners in Singapore to develop our own innovative solutions to better harness the silver workforce. The key competitive advantage that we have is our strong spirit of tripartism. By understanding the priorities of different stakeholders, and building strong consensus among workers, employers and the government, I am confident we can continue to drive strong economic growth and create good jobs for all in the years ahead. Our tactics of working closely to tackle the ageing population issue with tripartism as a secret ingredient, gives me confidence that we will overcome this challenge so long as we continue to stick together, have a common vision and find balance.

    
    Conclusion

18. Before I end, I would like to thank our tripartite partners NTUC and SNEF, and the Tripartite Collective for putting together this very important event; our sponsor, Temasek Foundation; Professor Chia for her work on the case study, and everyone for taking time off your schedules to be here today. I hope you will find the insights we will be sharing later on useful so that together we can make tripartism stronger and chart our way forward to enhance e retirement and re-employment as well as retirement adequacy for all our senior workers. Thank you very much.