SINGAPORE: Although economic conditions have been growing increasingly uncertain, the workgroup assessing when to raise Singapore’s retirement and re-employment ages decided that the changes should start to be introduced in the middle of 2022.
This was the response given by Manpower Minister Josephine Teo when asked about the timeline to increase both ages by 2030, and whether the first step to raise the ages, targeted for 2022, is set in stone considering the economic headwinds.
“We did not arrive at this date lightly even though towards the later part of our deliberations, it was clear to us that the economic conditions have changed quite considerably,” Mrs Teo said at a media briefing on Saturday (Aug 17).
The workgroup, comprising 11 representatives from the Government, employers and unions, noted that fundamentally, Singapore needs to address its tight labour market.
“That is not something cyclical in nature,” said Mrs Teo, adding that there is also the need to provide clarity and certainty to businesses and workers.
“Knowing that this is a roadmap, our efforts should be geared towards making it work,” she noted. “I don’t think we’d start off by thinking 2022 doesn’t work; if that’s the case, that wouldn’t be our recommendation.”
Two more moves could be needed to hit the targeted retirement and re-employment ages by 2030, according to Mrs Teo, but the Government will keep a close eye on how businesses are coping and the employment outcomes of older workers after the first adjustment.
“Those things will have to be monitored,” she told reporters.
“If it’s generally smooth, then we can proceed with the timeline and find the right moment.”
Raising the retirement and re-employment ages were among the 22 recommendations put forward by the tripartite workgroup after studying the issue for nearly 15 months. The Government has accepted these recommendations “in full”, said Prime Minister Lee Hsien Loong on Sunday during the National Day Rally.
In “gradual steps”, the retirement age will go up from 62 to 63 in July 2022 before being raised further to 65 by 2030.
Similarly, the re-employment age of 67 will go up to 68 in three years’ time, and then to 70 by 2030.
READ: NDR 2019: New retirement, re-employment ages of 65 and 70 by 2030; higher CPF contributions for older workers
The Central Provident Fund (CPF) contribution rates for those above 55 will also be raised to help older Singaporeans plan for retirement. In particular, the CPF rates of those aged above 55 to 60 will go up to 37 per cent, in line with the rates of younger workers.
While the first adjustment is set for January 2021, the full increase in CPF contributions will be done over the next 10 years or so depending on economic conditions.
In the workgroup’s report released on Monday, it was mentioned that a consensus “was not easy to achieve” and that stakeholders “made trade-offs for a win-win-win solution”.
During the briefing, Mrs Teo noted that while the labour movement “would have liked an earlier timeline”, employers had hoped for the changes to “be held off a little bit more”.
“But in tripartite discussions, we will have to land on something that both sides can work with. For the case of the retirement and re-employment ages, that turns out to be July 2022,” the minister said.
READ: Full restoration of CPF contributions for those aged 55 to 60; higher rates for workers above 60
Elaborating on the concerns of employers, Dr Robert Yap, president of the Singapore National Employers Federation (SNEF), said: “This has not been a very easy process. As you know, any increase in cost is always a pain for employers.”
Given how older workers tend to earn higher salaries compared to their younger counterparts, a higher proportion of older workers mean wage bills will “rise significantly”, said SNEF in its press release.
Non-wage costs, such as medical insurance and the increase in CPF contributions, will also present a “significant increase” in the fixed employment costs of older workers.
This comes amid growing headwinds in the economy’s medium-term outlook.
“Hence, SNEF calls on the Government to provide some form of support to employers during the planned changes,” said Dr Yap.
Nevertheless, employers will continue to employ older workers, as long as they are medically fit and able to contribute, said SNEF.
Employers would have to make investments in training, as well as evaluate part-time re-employment opportunities among others, to help older workers remain employable, it added.
NTUC secretary-general Ng Chee Meng said the concerns of businesses were “reasonable”, but urged companies that may not be facing challenges to take the lead in raising their retirement and re-employment ages.
“I would ask companies to take the leadership position and move if conditions afford, because workers knowing that employers care, will take the extra effort to up-train and up-skill,” he said.
Still, he stressed that workers must do their part too to stay updated with relevant skills. On NTUC’s part, it has been partnering companies to set up committees to help foster better training opportunities.
PROMOTING INCLUSIVE WORK PLACES
The workgroup also listed seven other recommendations on how companies can promote an inclusive workforce and progressive workplaces.
These include getting employers to embark on more transformational job redesigns that go beyond specific tasks, providing more part-time employment opportunities, and having structured career planning sessions when workers are in their 40s and 50s.
When asked by CNA if there could have been recommendations to take stricter action against employers that discriminate against older workers, or guidelines to help such workers seek recourse, Mrs Teo said existing measures are “quite well-established” and that the Manpower Ministry continues to make itself available to these workers.
“Overall, the numbers every year as a share of the workforce actually aren’t significant. By and large, we do have employers who are responsible and progressive,” she added.
"When the labour market is generally tight, businesses know it’s in their interest to take good care of their workers.”
READ: PM Lee outlines ambitious plans on education, retirement age and climate change concerns in NDR 2019 speech
For the changes in the retirement age, re-employment age and the CPF contribution rates to take effect, legislative changes will have to be made.
“We will take that in due course,” said Mrs Teo. “We have enough time to get that done.”