RETIREMENT AGE (AMENDMENT) BILL

[Mr Speaker in the Chair]

Debate resumed.

Mr Charles Chong (Pasir Ris): Mr Speaker, Sir, I rise in support of the amendment in the Retirement Age (Amendment) Bill, moved by the Minister for Manpower, and I also support the raising of the retirement age for the reasons stated by the Minister and Dr Vasoo.

Sir, the seniority-based wage system, practised by the vast majority of employers in Singapore, increases the wages of most workers every year through service annual increments. As a result of these increments, older workers generally receive higher wages compared to younger workers who are still at the lower end of their salary scales even for doing the same job. This may create a situation eventually where it becomes less and less viable for companies to retain the services of their older workers compared to the younger ones. Employers may also resist attempts to raise the retirement age as it will become progressively more expensive to retain an aging workforce. The situation for older workers is especially precarious during periods of economic downturn, as companies retrench and restructure their operations in order to remain competitive and to survive the recession. Higher-paid workers are more likely to be axed if their jobs can be taken over by less expensive younger workers. Our older workers will find it more difficult to hold on to their jobs in companies that are facing difficult times, as the cost differential of keeping them on the payroll compared to younger workers becomes too wide.

We have heard from several Members in the last few days, including NTUC Secretary-General, that older workers generally experience more difficulty obtaining and fitting into new jobs, requiring new skills and offering lower salaries, when they are retrenched compared to younger workers. It is therefore imperative that measures be taken to ensure that our older workers stand an equal chance of remaining employed and not be placed in a more disadvantaged position compared to younger workers.

Implementation of such measures becomes more critical in these economically difficult times, as companies look at ways to trim costs. Reduction in the rate of employer's CPF contributions for older workers had previously helped to keep the cost differential of retaining older workers compared to hiring younger ones manageable. The employers' contribution rate for younger workers until recently stood at 20% while employers pay only 7.5% or less for workers over 55 years of age. However, with the impending reduction in employer's CPF contribution rate by 10% for younger workers, but only by 3.5% or less for older workers, the comparative cost advantage afforded by lower CPF contributions for older workers will be eroded. Adjustments will have to be made in order to enhance the viability for employers to retain or employ older workers while ensuring that workers, regardless of their age, continue to receive a fair wage for their experience, skills and performance, and not to be discriminated against purely by virtue of their age.

Mr Speaker, Sir, I support the amendment for the reasons that have been stated. However, I would like to urge the Minister to consider safeguards that would ensure our older workers, whose salaries are at or below the market rate for the job, would not be adversely affected by this amendment where their salaries can be further reduced by 10% when they attain 60 years of age.

New section 4A(3) of the amendment Bill stipulates that the employer has to give reasonable prior notice to the worker before reducing his salary, and that the worker must be given a reasonable opportunity of being heard. After the worker is heard, new section 4A(3) implies that he is then left with two choices, if he is not happy with the reduction in his salary. He can either retire or be retired by his employer. In effect, it is really no choice, and the worker has to retire. Whether it is voluntarily or involuntarily, it is really quite academic.

Sir, I would like to have seen a provision in the Bill that would provide the worker an exemption of the 10% reduction in the salary after he attains 60 years of age if he or his union is able to establish that his cost to his employer is no more than that of younger workers with equivalent job performance in similar jobs in his company, or that his wage is at or below the market rate for this job.

Sir, I would also like to urge the Minister to prohibit employers who are not affected by the seniority-based wage system from invoking the provisions in this Bill in order to reduce the salaries of their older workers. For example, if an employer pays his workers a fixed hourly rate for the job, regardless of the seniority of the worker, should the employer still be permitted to reduce the salary of his employee by 10% once he attains the age of 60 years? To permit employers to do so without other valid grounds would tantamount to discrimination against the worker purely by virtue of his age.

New section 4A(5) permits an employer to reduce the wages of the older employees differently for various reasons other than age. However, this section may not have gone far enough to prohibit employers not affected by the seniority-based wage system from using provisions in this amendment Bill to reduce wages of their workers purely by them attaining the age of 60 years.

Mr Speaker, Sir, on balance, I support the amendment Bill as it will remove one more obstacle and one more excuse given by some employers for not wanting to employ older workers, and it will also enhance the prospects of further extensions of the retirement age for workers who may want to work beyond the current retirement age without imposing too onerous a burden on employers, especially in these difficult times. However, I would like to request the Minister to consider further refinements to the provisions of the Retirement Age Act in subsequent amendments after more companies modify or discard the seniority-based wage system for alternative systems.

Mr Cyrille Tan (Nominated Member): Mr Speaker, Sir, today, we face economic difficulties. The number of retrenchments has risen beyond 20,000, more than double the figure for the whole of last year. The unemployment rate has shot up to 4.5% in September, more than double what it was in July. So when the number of jobless rises, we can expect some people to call for a lowering of the retirement age. Yet, we are today meeting to raise our retirement age from 60 to 62, from 1st January 1999, as scheduled. Why are we doing this?

The Minister has cited some statistics to show the very rapid rate which our population and workforce are ageing. Faced with this trend, I share the Minister's view that there is an urgent need to raise the retirement age. With rising life expectancy, we should allow our older workers to remain longer in the workforce. This would enable them to continue to contribute to the economy and remain financially independent.

The Minister has provided convincing arguments on the need to cut the wages of older workers by up to 10%. This issue has been thoroughly discussed and agreed at the Tripartite Committee on the Extension of the Retirement Age. Unions and employees are aware of the rationale behind the cut and agreed it is justifiable under the seniority-based wage system. But from what I know, most older employees are prepared to accept a wage cut in return for the opportunity to continue working beyond the age of 60. They find this a reasonable trade-off in return for the opportunity to earn a steady income for another two years. In any case, most of them would have discharged the bulk of their financial obligations. They can also tap on their CPF savings to meet their expenses.

But, nevertheless, there is concern among some employees that employers might abuse the right to initiate a wage cut. They fear that employers might insist on introducing a wage cut even where the older workers' job worth and performance could justify their salary. It is reassuring earlier on that the Minister has in his speech highlighted the Tripartite Committee's call for employers to be judicious in implementing the wage cut. I certainly hope that employers could heed the Tripartite Committee's call and carefully consider various factors such as the companies' minimum-maximum ratio and the employees' skills, experience and job responsibilities before deciding on wage cut.

It is also heartening to note that the proposed Bill requires that the older employees be given reasonable prior notice on the intended wage cut, and also the opportunity to consider and respond to the proposed cut. I would urge both employers and employees to be open-minded and accommodating in their discussion of the wage cut and be prepared to listen to each other's views. If there is any disagreement on the wage cut, both parties should adopt a flexible attitude and strive to come to a compromise. I hope that the proposed section 4A(4) of the Bill would only be used as a last resort and employers would as far as possible avoid exercising the right to retire their employees under this section.

Next, I would like to touch on the issue of training. With the extension of the retirement age, older workers are expected to remain longer in the workforce. It is therefore important that they should continue to be given the necessary training to enable them to remain relevant on the job. Training would be especially essential in situations where the older workers are deployed to other jobs. From what I gather, some employers are reluctant to train their older workers because they perceive that these workers are either too old to learn or not cost-effective to be trained because they are due for retirement soon. This perception is wrong. Speaking from my experience, older workers are every bit as keen to learn as their younger counterparts. They take pride in their work and are prepared to upgrade their skills so that they can continue to remain an asset not only to the company but also contribute to its growth. Older workers are also less likely to job-hop so it does make economic sense for employers to continue to provide them with the necessary training.

On the whole, I am glad that the Government has taken a long-term perspective on the issue of raising the retirement age and has proceeded to raise the retirement age despite the economic downturn. I am positive that we have moved in the right direction and this policy will benefit not only our workers, but also our employers and the economy in the long run.

Mr Speaker, Sir, I believe that we have moved in the right direction by raising retirement age, even though in Germany, the new government is considering reducing it from 65 to 60. What would be the effect if we lower our retirement age? If we do so, we will merely be shifting employment from the old to the young. There is no additional employment created. What would the young retirees' do? How would they live? In the case of Germany, the unions expect the state to pay pensions. If not, the young retirees' would have to fend for themselves. Surely, this is not the way we should go.

People need money to live on. Extending retirement age has helped the more senior amongst us to be independent. The crux of the problem is to create employment, and keep people employable. So I support the Bill on the extension of the retirement age.

Mr Zulkifli bin Baharudin (Nominated Member): Mr Speaker, Sir, with the rapid ageing of our population, the mapping out of an employment policy must be one of the most urgent tasks, arguably more urgent, than any single employment policy. The Bill to reduce wages of employees above 60 years old must be supported as part of the steps to expand the employment potential of older workers. We should also give priority to efforts to encourage and facilitate employers to retain workers as long as they possibly can.

Sir, but the greying of Singapore requires effort that goes beyond legislation. Far from being a relatively young country, Singapore will enter the 21st century with the fastest rate of ageing ever experienced on earth. In the nine years between 2012 and 2021, the proportion of our population above the age of 60 will rise from 10% to 15%. The same process took Japan 15 years.

One of the biggest obstacles we face today is the inherent prejudice and wrong perceptions that people have about older workers. We have read recently how difficult it is for a 45-year old young man to look for a job. Quite frequently and wrongly, he is seen as being in poor health, difficult to manage, not strong, does not present an image of dynamism, not adaptable and would stifle the promotion prospects of younger colleagues. Evidence from advertised job vacancies shows the incidence of age qualified vacancies is fairly widespread. They fail to realise that older workers cannot be neatly grouped into skill, ability and physical strength. Although physical strength does decline with age, chronological age is by no means an accurate indicator of one's ability to perform a task. Age does not necessarily affect productivity.

But, Sir, we must ensure that older workers are not exploited or discriminated. In 1978, the US introduced a legislation to outlaw discrimination on grounds of age among workers up to the age of 70. Perhaps, it is timely that we should incorporate such legislation here. Many of the older workers want to continue to work, especially if they can find less stressful, less physically demanding work. They want to live independent lives. Many prefer not to depend on their children as a source of income. Many simply cannot afford to remain unemployed without suffering a substantial loss of income and fall in living standards. Even for the increasingly affluent group, work will provide more than just income. But status, interest and companionship and the need for these does not necessarily become less important on retirement.

I would like to propose four specific suggestions for the Minister to consider:

(1) Prepare workers for retirement. Many are ill-prepared to cope what maybe one third of their lives. We should have programmes that will prepare them and enlighten them of the choices that they can make. For example, volunteer, part-time work, or even a change that will lead to a life of leisure, especially at a time when we are calling for more active people sector. We can also establish more adult education programmes in the existing tertiary institutions to cater to this need.

(2) We should encourage and prepare workers for second careers. We must fully utilise aged workers. Their capacities and long job experience are human resources in which tremendous public and private investments have been made. These are reliable resources that have to be effectively utilised not only for their sake but for the community and the society.

(3) We must reserve some jobs which are most suited for the elderly. Grandparents today are the most ideal choice of care-givers for our children. Yet, how often do we see grandparents in kindergartens, in childcare centres where they can be effective not only as tutors, but in passing down the right values and attitudes to the younger generation. This also applies to many of the jobs in service counters in Government Ministries and statutory boards. They are especially suited to community organisations, for example, the CDCs, the town councils, which require a high level of human relationship, skills and patience. The elderly make good counsellors because age may bring maturity of judgement and the weight of experience.

(4) We must expand the Skills Development Fund. It should be enlarged to allow for the training of older workers for their second careers. The fact is that blue collar workers will have fewer opportunities compared to white collar workers in finding jobs where their skills and experience can be fully utilised in later years. Therefore, programmes to train workers should also be extended to older or retiring workers. Unfortunately, technological innovation may also induce obsolescence in an ageing workplace.

Sir, indeed, the current economic crisis will pose a great challenge because of falling demand for labour. Despite the wage cuts and reduced CPF contribution, employers may still prefer to employ younger workers. We must do more to change this. In Singapore, today, sadly, becoming 60s is a watershed because to many, it is an end of employment and the beginning of a loss of income, status and sometimes independence. Retirement may not necessarily mean an end to this. I would urge the Government to do more to change the attitude people have of older workers.

Sir, think about this. Few would attribute the same characteristics to a 30-year old as they would a 60-year old. Why then should the 60s and 90s be classed together as one group? It is very easy to assume that all the elderly want this or feel that. It might be more realistic to generalise if people are divided according to how they appear in behaviour, attitudes and thoughts. "As old as you feel" is one approach. And if to act old is to be sad in one way, to lack flexibility of thought and to generally look old fashioned, then, Sir, there are many people in the 20s and 30s who will qualify.

With that, I support the Bill.

Mr Lim Swee Say (Tanjong Pagar): Mr Speaker, Sir, the average lifespan of Singaporeans today is 76 and the current retirement age is 60. What this means is that, on average, Singaporeans would spend about 70% of their adult life working and 30% in retirement. With the raising of the retirement age to 62, this will increase from 70% to about 75% and eventually, if we do raise the retirement age to 67, it will go up to 85%. I therefore support the extension of the retirement age because I believe this will enable Singaporeans to live a more fulfilling life.

However, in supporting this extension of retirement age, I would like to raise three points for the consideration of the Minister. Firstly, the purpose of extending retirement age is to secure the right for Singaporeans to work beyond 60. However, we should continue to leave it to the individual Singaporeans to decide whether they want to exercise the right beyond the age of 60. So from that angle, in determining the pension arrangement for civil servants, I hope the Government will not penalise civil servants who are on the pensionable service and who decide to work beyond 60 under this extension of retirement age.

Secondly, as we extend the retirement age, we are endorsing pay cut of up to 10%. As the Minister mentioned, this is because of the seniority-based wage system in Singapore. From the union's perspective, we hope that this is only a temporary arrangement because the long-term solution is to move away from the seniority-based wage system towards a base-up wage system. Sir, in this regard, we hope that the civil service can take the lead to move into the base-up wage system because today, the civil service likewise depends very much on the seniority-based wage system. We hope the civil service can respond. As we extend the retirement age, why not take the lead to move into the base-up wage system in a big way, in a concerted way, so as to encourage the private sector to follow suit.

The third point is that with the extension of retirement age, even though it will give Singapore workers the right to work, it does not guarantee that Singaporeans will be able to exercise the right. For example, in this particular crisis, many companies are now talking about renewing their workforce so as to gear up for a knowledge-based economy of the future. Some of them are talking about retrenching the older workers and re-hiring the younger workers. So their way of renewing workforce is by retrenching the older workers. If this were to continue in a big way, then obviously, many Singaporeans are not going to be able to exercise their right to work beyond 60 years old under the extension of retirement age. We hope the tripartite partners, namely, the unions, Government and employers, can work together to arrest this particular trend. We need to encourage as many companies and employers as possible to work together to help our Singapore workforce to remain healthy, employable and productive, so that as many Singaporeans as possible can really exercise their right to work beyond 60 under the extension of retirement age. On that, I support the amendment Bill, Sir.