EMPLOYMENT ASSISTANCE PAYMENT (EAP)

EMPLOYMENT ASSISTANCE PAYMENT (EAP):

(Re-employment of older workers): 8.

Er Lee Bee Wah asked the Minister for Manpower in view of the suggested Employment Assistance Payment (EAP) in the Tripartite Guidelines on the Re-employment of Older Workers (a) whether the Ministry had considered how the EAP may create hardship for small and medium enterprises that are unable to afford paying compensation to such employees; (b) whether the EAP will cause some employers to consider laying-off their workers who are approaching 60 years in order to avoid the payout.

Mr Gan Kim Yong: Sir, as announced earlier, we will introduce the re-employment legislation in 2012 to facilitate the employment of older employees beyond the statutory retirement age of 62,

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thereby raising the employment rate of older workers.

Re-employment is a flexible and effective way to help workers work for as long as they are able to, and allow companies to continue to tap on their expertise and experience. We expect that the majority of the employers will be able to offer re-employment to their employees, given the flexibility to deploy them to a different job and on different terms if necessary. According to a survey done by MOM in 2008, 65% of companies with a specified retirement age – not all companies have specified retirement age but for those companies which have specified a certain retirement age – have introduced some form of re-employment even before the law is enacted. The majority of companies which did not have a retirement age, in fact, allowed their employees to continue working past the statutory retirement age. MOM’s Labour Force Survey also found that the employment rate of older employees aged 55 to 64 has remained stable at 57% in 2009, despite the economic downturn. This shows that most employers do value their older workers. To help our companies and workers implement re-employment early, we will issue a set of Tripartite Guidelines on the Re-employment of Older Employees. The draft was released for public consultation in November last year and we are in the process of consolidating the feedback and fine-tuning the Guidelines.

We recognise that despite best efforts, some employers may still not be able to find suitable jobs for employees eligible for re-employment.

For instance, companies undergoing restructuring may find it difficult to do so. However, these should be the exceptions. For such employers, they should first help affected employees by offering employment assistance such as career counselling to

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help them prepare for new jobs elsewhere, or send them for training to enhance their employability. The Employment Assistance Payment (EAP) is intended to help workers tide over the period while they are looking for alternative employment or undergoing re-skilling. This is consistent with the objective of helping these workers stay employed.

We are mindful that the amount of EAP should be carefully calibrated so that it does not impose undue burdens on employers while at the same time, it should not become an easy alternative to re-employment, which would go against our objective of raising the employment rate of older workers. Hence, MOM, together with the tripartite partners, has adopted a balanced approach to the formulation of the EAP. To provide greater clarity and guidance for employers, we intend to specify a minimum and a maximum amount for the EAP in the finalised Guidelines. The tripartite partners will work together to guide employers and workers on how to implement these guidelines, including the EAP.

On the Member’s second query, it is an offence under the Retirement Age Act for employers to terminate their workers on the grounds of age. Older workers who feel that they have been terminated unfairly because of age can seek redress from MOM or approach their union for assistance if they are union members. It is a good sign that MOM receives very few complaints of such nature every year. This shows that employers are generally responsible.

MOM will continue to work closely with the tripartite partners to promote the employment of older employees, and to help employers implement re-employment practices for the benefit of companies, employees and the economy.

Er Lee Bee Wah (Ang Mo Kio): Mr Speaker, Sir, I would like to thank the

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Minister for the answer. There is one supplementary question. Will the introduction of EAP make it difficult for workers who are in their late 50s and who are retrenched to seek re-employment in the job market?

Mr Gan Kim Yong: As we move forward, as provided under the Retirement Age Act, for employees who are recruited when they are 55 years or above – that means they found a new job when they are 55 years or above – they will be exempted from the Retirement Age Act as well as the Re-employment Act. Therefore, for an employer who has already recruited older workers 55 years old or above, he will not be obligated to provide re-employment. This is to be fair to the employer and at the same time not to undermine the employability of the older workers.

Mr Speaker: Mdm Halimah, last question.

Mdm Halimah Yacob: I would like to ask the Minister one supplementary question. In the unionised sector, about 80% of the companies are already doing re-employment, but the figure is much lower in the non-unionised sector. They are obviously lagging behind. I would like to ask the Minister what measures and efforts will be put in place to make sure that the workers in the non-unionised companies are not at a disadvantage.

Mr Gan Kim Yong: Sir, as I mentioned in my reply, although many of our companies, unionised or otherwise, do not have specific re-employment practices, guidelines or rules, they, in fact, do allow their workers to continue working way past their statutory retirement age. In effect, they already are practising re-employment. But that is not to say that we will then relax and do nothing. I think it is still important for us to continue to work with our tripartite partners, our

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various industry associations and business chambers to reach out to companies/employers, big and small, to help them implement re-employment practices even ahead of the legislation. For that purpose, we have set up a tripartite workgroup to implement re-employment, and this workgroup will work with the various parties to explain the re-employment guidelines and to help them introduce re-employment practices using the guidelines. We will work out incentives and assistance plans to help them. For example, we have the ADVANTAGE! Scheme which reaches out to companies and helps them put in place such practices and defray part of the cost of introducing these practices. I would take this opportunity to encourage all employers and employees to work together with MOM and our tripartite partners to implement re-employment as early as possible.