Debated in Parliament on 9 Jan 2017.
Debate resumed.
Mr Heng Chee How.
Mr Deputy Speaker, thank you for allowing me to speak on this Bill. I would like to make three points today.
First, I support this Bill. We must continually innovate our methods so that our mature workers can keep contributing, and this Bill does that.
Second, big disruptions are happening to global trade, technology, business models, buying behaviour. How things are made, sold and bought are all changing quickly. Businesses and workers who can adapt will grow. Those who cannot, risk becoming obsolete more quickly than before. These same factors will also impact the chances of displaced workers when they look for jobs.
Hence, my view is that improvements in this Bill are absolutely necessary but are not sufficient to maximise the working years of mature workers who would have to deal with this increasing flux.
This brings me to my third point, which is that there is a critical need for the tripartite partners to examine these developments carefully and proactively devise policies and plans to address them in the interest of both mature workers and Singapore.
First, on the Bill itself, I am very happy, like all my fellow Parliamentary colleagues, about the key amendments: the one raising the re-employment age ceiling from 65 to 67.
Second, repealing the power of employers to reduce wages at age 60. Very few employers had resorted to that, given that most were fair-minded and that pay is very much performance-driven nowadays. Repealing this is timely.
Third, allowing employers to offer re-employment job positions that go beyond the immediate company or organisation, after due efforts have been made within the immediate company, to workers who are due for re-employment.
This gives more flexibility and scope for job sourcing. However, it is important to note that it is the worker's right whether to accept such an offer, and they cannot be ridden roughshod over. So, that retains the security that they have under current arrangements.
Where the offer cannot be met with acceptance, the worker remains entitled to EAP.
Mr Deputy Speaker, clearly, mature workers wanted an extension of the age ceiling soonest. The Labour Movement fully understands our mature workers' feelings and needs and has been pushing hard for an early resolution. Yet, the negotiations have taken several years. You may ask why?
Employers wanted added flexibility of options for them to fulfil their legal obligations without overly constraining their business and manpower decision-making. Workers, on the other hand, wanted more legal assurance to help them work beyond 65 and on fair terms. They do not want to be discriminated against just because of age. Workers wanted as much security as possible. In short, the negotiators were seeking a balanced and sustainable approach to achieve flexi-security.
The amendments proposed in this Bill are, therefore, agreed to as a package to address the needs and interests of both the mature workers and businesses.
A key lesson from these negotiations is that all sides were open to considering fresh approaches and innovations to reach a win-win outcome that secures each side's core interests. Such a mindset would be even more necessary when seeking new paths forward in the future.
I now move on to my second point. A company will only employ a worker when there is a need to create a job position and when they can find a candidate whom they believe is worth employing.
Singapore's economy is undergoing fundamental restructuring. Even as we work hard to transform ourselves, we are buffeted by serious cyclical and structural changes. Events in 2016, for example, have also shown us how volatile, uncertain, complex and ambiguous (VUCA) the world is becoming.
Consider the nationalist and protectionist backlash against globalisation and free trade, rapid currency swings, heightened global political instability, terrorist and cyber threats, technological changes interacting with social connectivity to upend business models in both manufacturing and services and to redefine where productivity and innovations are to be found and exploited.
So, these developments raise two questions, one I consider basic and the other one consequential.
The basic question is: given these disruptive challenges, how will goods and services be produced and sold? If technology and social connectivity, whether through driver-less vehicles, 3-D manufacturing, robotisation or e-commerce, if these are causing the creating, selling and buying of goods and services to be carried out in very different ways from before, then just making laws to enable people to do existing jobs for more years would become less and less adequate for more and more people as time passes. Even upgrading skills to do existing jobs better may or may not be adequate.
This flux increases the risk of mismatch and worker displacement. The structural challenge in this is very real and serious. Unless we ready ourselves to deal with it, structural unemployment, which is sticky, may rise. And structurally unemployed workers, especially mature ones, will find that even cyclical upturns will not bring back the jobs because the old jobs may no longer exist.
The consequential question is: what should we then do to help mature workers stay employed or be re-employable in this changed and changing environment? This is my third point.
I believe that, for this, we need to strike out boldly in three areas.
First, measures that help mature workers stay valuable and cost-competitive. Reduce net business cost of employing mature workers, for example ‒ and this has been mentioned by both the Minister and the other Members ‒ through an extension of employer wage subsidies, such as SEC or the additional SEC. In this regard, I note the Minister's point that this is being reviewed, and I strongly support every effort and consideration towards its extension because not only would it help render the mature workers more cost-competitive in general but, in the current soft economic climate, it would be particularly pertinent.
Next, step up efforts to educate companies on the implications of the peaking of the Singaporean workforce in the coming five years, and to help them find ways to tap on every worker, regardless of age, to the best extent.
Next, increase publicity of mature workers being valued for their worth on the job, as well as for their resourcefulness and tenacity in adapting to new circumstances and in seizing opportunities. The more our society sees this as normal, the more mindsets about mature workers ‒ who they are, what they are capable of ‒ will shift in the positive, correct and desired direction.
Secondly, we have to do more with measures that help match displaced workers quickly to new work.
If increasing flux raises displacement risk, then we must find ways to increase the clearance speed of our job-matching mechanism so that we can avoid a build-up of a pool of structurally unemployed workers. While this is true for workers of all ages, it would be particularly pertinent for mature workers of all levels, given the realities of the labour market.
To do this well, there is a need to significantly improve our knowledge of where the jobs and displacements of today and the future are or will be. We also need to enrol the mature workforce into life-long adaptive upgrading much more intensively and find ways to guide such learning and relearning beyond providing funding.
Our job and training matching efficiency and effectiveness must also undergo a step upgrade to deal with the expected larger flow volumes as this flux spreads and intensifies.
It would also require significantly enhancing social support and lowering switching costs for displaced mature workers who are undergoing retraining for new jobs in new sectors. These displaced workers have families to feed and commitments to meet. So, if left without systematic transition support, many more may exhaust their resources and end up in sub-optimal and underemployed work. Others may be discouraged from the labour market altogether and you will have this pool building up and that would become eventually a threat to social cohesion. We do not want that to happen.
The third area of action would be the structural reform of work, work processes and also legislation, regulation and so on. The gig economy and the workforce will grow quickly, if we look at international trends. Companies will keep a small core and tap on contract, outsourced or freelance labour more and more frequently. New-age workers and displaced ones may also seek to earn a living as self-employed, freelance providers, independent contractors, or other non-traditional forms of work, whether out of choice or no choice.
New technologies and social commerce platforms may also reduce or eliminate certain previously abundantly available self-employed or gig job options in time to come, such as the impact of autonomous vehicles on hired driving.
This is, therefore, much more complex than moving from full-time to part-time work, or moving from being a salaried worker to being self-employed as a business owner.
Our labour laws and arrangements have to keep up with the changes and challenges, so as to ensure that the risks and rewards of enterprise and production continue to be fairly and sustainably balanced between businesses, working people and the state. I mentioned the state for considerations, such as in terms of tax collection and social support outlays.
Press on to revamp workplaces and work processes to be age-universal, through ramping up such schemes as WorkPro. The design of workplaces, work processes and jobs have a direct and significant impact on whether older persons can avoid premature loss of employability. Given the relative difficulty faced by displaced mature workers in finding new jobs quickly, such upstream work will help reduce downstream pain.
Thus far, we have largely gone on the basis of a single national statutory retirement age, followed by a standard duration of re-employment. I believe that it is time also for the tripartite partners to study how mature workers in different occupation types may raise their effective working years beyond prevailing national statutory norms, for example, via industry-based or occupation-based norm setting.
Mr Deputy Speaker, the Bill before us will help more mature workers cope better and continue to work, especially in the jobs of today. At the same time, the future is rushing at us at an unprecedented speed and with unfamiliar manifestations.
Even as we strengthen our frameworks of today, we must mobilise Singapore and Singaporeans to tackle that VUCA future with focus, joint effort and a sense of urgency. Mr Deputy Speaker, I support the Bill.
Mr Gan Thiam Poh.
Mr Deputy Speaker, I rise in support of the Bill. In view of our ageing population in which one out of four Singaporeans will be aged 65 and above by 2030, the Government would have to work with employers to adjust to the new norm where older workers will become one of the key pillars of our workforce.
The amendments to the Retirement and Re-employment Act are necessary to include those who are able and willing to continue working. Raising the re-employment age to 67 is one thing; convincing companies to retain and recruit these senior employees is another.
We need to balance the needs of businesses and workers. How would the Government encourage both employers and employees to retain older workers at other jobs within the company and at re-negotiated wages? My concern is that it is easier for an employer to offer EAP than to help an older employee find a position.
Currently, the SEC scheme provides some incentive for companies to hire older workers aged above 55 earning up to $4,000 a month. These companies will receive SEC of up to 8% of the employee's monthly wage. However, to attract employers to hire workers at the much older age of 67, particularly those who used to work at other companies, additional incentives, monetary or otherwise, would have to be given. Incentives will be needed for the current transition period until the concept of working into a person's 70s or even 80s becomes more widely accepted and integrated into our company culture.
I would like to ask the Minister: what have the public sector employers, including Statutory Boards, done for the re-employment of older workers? What are their success rates and the percentages of such workers being retained and redeployed? In addition, what is the percentage of older workers aged 62 and above in SMEs, relative to large corporates? This information will be useful for reference by both the public and private sectors and will inform our future policy measures.
Ms Jessica Tan.
Mr Deputy Speaker, thank you for allowing me to speak on this Bill. I rise in support of this Bill as the amendments seek to help older local workers who are able and wish to stay employed to do so. With an ageing population, increasing life expectancy, we are seeing more people able and wanting to stay in the workforce. In my role as a Member of Parliament, I have met many older residents who have shared with me their desire to stay employed. Raising the re-employment age to 67 years and the provisions in this Bill will be welcome news for these older workers.
There are three areas of the Bill that I wish to clarify.
Raising the re-employment age to 67. Over the last five years, we do see an increasing trend of older people working in Singapore. For those 65 to 67 years, the labour force participation rate has risen from 30.9% in 2010 to 42.2% in 2015, although at a slower rate in the last three years.
The Bill specifies that from 1 July 2017, the new re-employment age of 67 will be applicable to those born on or after 1 July 1952. Can the Minister clarify what this will mean for those born before July 1952 who are currently employed and not yet 67 years of age? While I understand the need to give employers time to adjust to these changes, can those aged above 65 but below 67 be included to receive the same benefits with the provisions of this Bill as those born on or after 1 July 1952?
The second area, the repeal of the provision allowing employers to cut employees' wages at the age of 60. I am glad that this provision is being repealed. It is only fair that employees, regardless of their age, should not be compensated any less for the job that they are doing just because they are older.
The Minister has shared in his speech that the Government is assessing the need to extend the 3% additional SEC that supports employers to offset wages which will expire on 1 July this year. I do hope that a decision on this can be made sooner as it will benefit those currently working aged below 67 not covered by the new re-employment age of 67 as well as what the Minister had shared in his speech, those working and above 67.
The final area, on the inclusion of the option to allow eligible employees to be re-employed by another employer to increase labour market flexibility, it is good to allow for this flexibility and also having the safeguard that this can only be effected with the agreement of the employee. I do believe that going forward, there is a larger factor that needs to be addressed, especially as we discuss older workers. With the speed of technological changes and the disruptions impacting industries, business models, how work is done and the type and quality of jobs available, there will be job creation, but also job displacements, as well as new skills requirements.
So, while we make provisions for re-employment and raise the re-employment age to enable older workers to stay in the workforce if they wish and are able to, we need to complement this with concrete efforts to future-enable all workers. This will involve the development, training and retraining of workers before they reach 60. This will help workers, including older workers, to be more ready to take on re-employment opportunities and new roles that will exist at re-employment age.
For workers, having a learning mindset is important. If all of this does not happen, we would probably see a situation where employers will have to make the EAP as the jobs available will not be suitable for the worker with the current employer or any other employer. Mr Deputy Speaker, I support the Bill.
Miss Cheryl Chan.
Mr Deputy Speaker, as we look at an ageing population in Singapore, this Bill serves to highlight some truths about social awareness of our ageing workforce and the current situation that many seniors face today or in the coming years. For a society with an active workforce, surely our definition of retirement and re-employment must go beyond the traditional association with an age or the adjustment of benefits in a contract for older workers.
How do we then define retirement? A check with Oxford Dictionary describes retirement as "The action or fact of leaving one's job and ceasing to work". Literally, this means anyone can retire at any age they feel comfortable to go without a need for the job and not because they have reached a predefined age and need to be made redundant from work.
I view both retirement and re-employment as personal choices where individuals decide when they wish to retire and whether they wish to be re-employed post-retirement at work and in what capacity. Sadly, the current employment trends reflect the harsh reality of the mindset of many employers and society at large that links one's effective worklife contribution to a particular age. While we question the state of things, should we not be asking what the root cause is? And are there better options in keeping a healthy, active workforce of willing and engaged workers?
I agree that it is necessary to have some short-term plans on creating active work for our seniors or Pioneer Generation. But is it sufficient to achieve sustainable re-employment through a transactional focus on areas like how and when companies find ways to employ our seniors beyond a certain age; or for the Government to continue providing transitional subsistence for the employers to hire our seniors? Now, would it not be more critical for us to fast forward our thinking on solutions for the future where generations of seniors, where workers in their mid-40s today, can continue to be meaningfully involved at the job market as they mature in the workforce?
We should recognise that under the Tripartite Committee on Employability of Older Workers (Tricom) and TAFEP, some progress has been made through working with the tripartite partners and also with the WorkPro Grants. However, depending on the Government alone or the law to ring fence and provide security for our older workers may be counter-productive in some instances and stagnates progression in achieving our desired outcome of having active ageing for those who wish to. There is a Chinese saying, 强 中 自 有 强 中 手、 一 山 还 有 一 山 高. What this means here is, whilst we can put some measures in place to ensure that our older workers remain employed, but the employers could also find more reasons and tactics to argue why they prefer not to have seniors in their workforce.
Based on feedback, I believe there are three reasons that primarily led to the companies' reluctance in retaining or hiring older workers. First, our subconscious conjectures that associate our seniors to specific roles and worth of their abilities when they come of age. Second, the perceived higher cost of having older workers due to their need for more medical benefits and correspondingly more sick leave and time off work. Third, many companies lack the ability and bandwidth to deploy resources with job match, redesign appropriate jobs and have little will to retrain and manage these workers.
As the Government encourages and persuades the tripartite partners to re-employ older workers, I urge the Ministry to consider the following on grounds of immediate and long-term needs.
The first area is the increased focus on contract workers and freelancers. I have previously raised in this House and would reiterate again the need to provide access to basic knowledge related to contracts, service agreements, common HR practices to all working age adults, so that they are better equipped with understanding the latest industry practices and mentally prepared to handle the situation if it does arise.
Increasingly, our older workers will not be hired as permanent or full-time staff and more PMEs are facing retrenchments even before the specified retirement age. Many of them end up with roles as part-time contract workers and freelancers. Such information and knowledge bear significance and are central to the workers on being better-informed and reduces the risk of unfair practices or litigations.
With the tightening labour market and a maturing workforce, it is hard to imagine why our older workers are perceived to bring no value at all to the workforce. Some claim that physically, the older workers cannot cope or do not have relevant skills to handle the work. This may be true for some specific jobs, but it cannot be so for all. Many companies are willing to hire fresh graduates or some with little relevant experience, so why not the older workers?
From my experience and observations, many mature workers have stronger resolve to learn, are willing to take on more scope if given the opportunities and share a greater sense of loyalty to their companies. Indeed, their wealth of experience cannot be redundant simply because they have reached an age. To change this trend, I strongly urge hiring managers and employers to rethink and to shift their mindset. Consideration must be based on the value that each worker brings to a company, many of which will not diminish with age, such as expertise and experience; and if done in collaboration, more work opportunities can be created locally and reducing social costs.
As pointed out by my colleague, Mr Heng Chee How, it will also be useful for MOM to work with SPRING Singapore to actively share practices and showcase how some companies, especially SMEs, have successfully implemented and redesigned their work scope to help mature workers manage new functions that they have not encountered previously.
In the second area, enhancing the framework for broad-based learning. We constantly speak about continuous learning and encourage individuals to cultivate a habit of learning not only in school but also at work. Often, this is not an easy task for companies without a people development centric culture or others without the scale to offer their staff training beyond their current job scope.
As we develop the scope of SkillsFuture in Singapore, I suggest looking at courses from a different angle and enhancing it in three ways. First, to gradually mandate that tertiary students should have at least an opportunity for internships at companies in the public or private sectors through the course of their study. Second, allow companies to tap on SkillsFuture credit and expertise to develop in-house training programmes relevant to their organisations or industries. Third, incentivise the employers not through salary subsistence but skills development and work scope crafted for mature workers.
Why the need for this? Early exposure provides our students with choices and understanding of what the future work environment might be or to further pursue areas of studies they are keen to specialise in. For the companies, it is a resource pool and also an early recruitment of potential talents that fit their company well.
While it is important to develop skills in areas that one is lacking and those where one is passionate about, the identification process and taking the relevant courses to reinforce it is not an easy path. The challenge that many individuals may face after gaining qualification from third party vendor courses in the open market is the level of recognition these companies are willing to accept on relevance and useful skills they have acquired.
Thus, if company or industry-related training can be considered under SkillsFuture, it will provide the incentive, scope and flexibility for the companies to enable some focus on continuous upgrading of their workers. Some of the programmes can be on-the-job training or cross-function job rotations; and this ultimately benefits the companies and enhances broader skillsets of our workers over time. This will also assist the SMEs which usually do not have the luxury of more resources and ability to dedicate their staff for external training. For workers in this situation, they will be further disadvantaged from not having a chance to learn broadly. With time, they may even face more difficulties to find the next appropriate job.
So, Mr Deputy Speaker, while I support the Bill and efforts that MOM has made thus far, we need to be cautious of the weary and prolonged effects a society may face if the efforts are made solely on the part of the Government. I hope our society can embrace the reality of an ageing workforce, progressively change their mindset on appreciating values of workers based on their abilities and make room for more people who are willing to contribute their part.
It may not be time for many to hang up their boots as they are cruising in their career, but reality hits hard when the mature worker wishes to remain active at work, only to find that redundancy and no vacancy are the music that welcome them. With this, I support the Bill.
Mr Henry Kwek.
Mr Deputy Speaker, the amendments to the current Retirement and Re-employment Act are sound. It strikes a good balance between protecting our seniors and encouraging our employers to hire seniors. Therefore, I stand in support of the Bill. I am also very heartened to hear Minister Lim's remarks about considering extending the SEC. I think that is a very good measure that many will welcome.
The next challenge we face is to get the information across to both our seniors and our companies. More so for the former, as our seniors are much more vulnerable.
One important point to communicate is the concept of re-employment age. On the ground, residents occasionally tell me that companies ask them to leave because they have reached "retirement age". Some companies even say that the "law prevents them from hiring seniors beyond a certain age". I am disappointed when I hear such misconceptions.
As my Parliamentary colleague Darryl David recently put it, as long as the employee is medically fit and willing, the re-employment age of 67 is just the floor and not the ceiling. The law does not stop companies from hiring seniors beyond 67, even though they are not covered under the rules spelt out in the Bill. This misconception shows us that empowering seniors with information is key. I have a few suggestions.
First, the Pioneer Generation Office can conduct household visits to seniors above 50 to share information on the current employment laws, as well as the incentives, such as the SEC, that can help them and that companies employ them. Secondly, well-crafted advertisements in different languages, including dialects, are also options. The ones for MediShield Life are very well-received and very effective. Third, let us not forget social media, especially since some of our younger seniors are also tech-savvy.
Besides informing seniors, companies need to understand that they not only gain from monetary incentives, but also from the experience our seniors have. However, it is not easy for businesses, especially SMEs, to stay current on regulations.
Therefore, our Government can do more to keep our businesses informed. For example, one, the upcoming business grant portal can be clear in stating senior employment incentives and re-employment age, perhaps through a pop-up banner at the launch page. This will ensure that our business leaders and towkays are kept in the loop. Two, the relevant MOM, CPF and Immigration and Checkpoints Authority (ICA) websites can display such information, too, so that the HR managers are aware of it as well.
Mr Deputy Speaker, in conclusion, the Bill amendments today are an important step to assure our seniors of their employability. But for the law to see its intended effect, seniors and businesses need a genuine shift in mindset. And for that to happen, they must first be empowered with the right information. I look forward to the responses from MOM and I stand in support of the Bill.
Minister Lim.
Mr Deputy Speaker, Sir, first of all, I would like to thank the 17 Members who have spoken and for their support of the Bill. Let me try to address the key issues brought up by the Members.
First of all, I am happy to see that all of us in this House share a common objective which is to help as many Singaporeans as possible to work for as long as possible. Given the longer life expectancy, I think there is no disagreement that helping our seniors to live what I call "H2P2" − a Happy and Healthy, Productive and Purposeful life. I think we are on the same wavelength.
The issue is: what is the best way to go about achieving this? First, why re-employment and not retirement? Why do we not raise the retirement age? The Member Assoc Prof Daniel Goh asked that question: why leave the retirement age at 62? Why not raise it to 65 or even higher? Why raise only re-employment age?
Mr Deputy Speaker, Sir, we started off raising the retirement age as the key mechanism to enhance the employment rate for older workers. We used to have a de facto retirement age of 55. Later on, we formalised it at 60 and it was alright. Later on, the tripartite partners worked very hard together to raise it to 62. We managed to make it happen. But after that, we hit a wall. When the tripartite partners sat down to talk about raising the retirement age from 62 to 65 and beyond, all three parties objected.
First, the employers objected for the very obvious reason because they are concerned about the impact on businesses. On the part of the workers, Members may not be aware, our younger workers objected, too. In fact, at a grassroots dialogue chaired by Prime Minister Lee Hsien Loong, a young worker asked him a very direct question. He said, "I am now in my 40s. I have been waiting for many years to take over the position of my boss. My boss is going to retire very soon because he is reaching 62 soon. Now, if you were to raise the retirement age to 65 and beyond, it means I have to wait a few more years." He asked, "How is the Government going to take care of the aspirations of the young?" The young employees objected.
The older employees also expressed their concerns. They talked to NTUC. Every time we raise the retirement age, employers will demand a wage cut because of various considerations, and the older employees would object to the wage cut. So, we could not move. Employers did not want to move, young workers did not want us to move, and unions were pressured by senior employees not to give in to demands for wage cuts. So, we were stuck. How to find a solution? But we believe that instead of having all three parties looking at this as a problem, why not all of us work on a solution that can produce an all-win outcome?
We went to Japan. We studied their model. Every country talks about raising their retirement age but, in Japan, they pursued the direction of re-employment age. The core difference between retirement and re-employment age is that when you raise the retirement age, the expectation is for same job, same pay. As a result, we may deprive the younger ones of career progression. Whereas when Japan introduced the idea of re-employment age, the concept is, not necessarily the same job, not necessarily the same pay.
They told us when we visited them in 2005, 2006 that, in Japan, under the Re-employment Act, no manager is allowed to be re-employed as a manager so that the position will be made available to a younger successor, and that person who is re-employed will provide value-add, maybe as a consultant, an advisor, or a staff officer to guide and help the younger ones to succeed. In some cases, if the corporation does not have a position opening for them, they allow them to be deployed to the subsidiaries. Why? Because they can actually help to bring their expertise and experience to the subsidiaries.
We learnt from them. We thought it made a lot of sense. We invited the Japanese experts to come to Singapore to conduct workshops. And finally, we came to the conclusion that that is the best bet and the way to go ahead. As a result of that, we moved away from raising the retirement age towards the introduction of the re-employment age. I would say that, over the last five years since 2012, it has been proven that what we did was correct.
The second point: are we moving too slowly? Have we wasted 23 years? Deputy Speaker, Sir, we learnt from Japan the concept of re-employment. Come 1 July 2017, we will be ahead of Japan in the adoption of the re-employment age. The re-employment age in Japan today is still at 65. We learnt from them five years ago and adopted the re-employment age of 65. Come July, our re-employment age will be 67, but in Japan, it is still 65. Our re-employment age at 67, compared to many other countries, is already among the higher ones. Of course, some many argue: why not do away with retirement age completely? Why not do away with re-employment age completely?
We did a quick comparison. There are countries that have no retirement age, for example, the UK, Australia, the US, Denmark, New Zealand and Germany. They have no retirement age, but yet at the same time, there are other countries − I am talking about the developed economies − they have a retirement age. For example, in Korea, it is 60; in Switzerland, 65 for males, 64 for females; Sweden, 67; Finland, 68; Luxembourg, 68. Some of them are about the same as us, some are lower, and some are higher than us.
At the end of the day, we look at the employment rates. Yes, you can do away with the retirement age or have a higher or lower retirement age. The bottom line is: to what extent are we able to help the older workers to stay employed?
We looked at the employment rates of those who are aged 65 to 69, and guess what? What we discovered is that, with Singapore's re-employment age of 65, our employment rate of those aged 65-69 is 40.4%, as of 2015. Of the developed countries, two countries are higher than us: Korea whose rate is 44.8%, and Japan whose rate is 41.5%. We learnt from them about the re-employment age but when it came to actual employment rates, they are still higher than us.
These two countries are higher than us. And guess what? If we compare ourselves to all the other countries with a higher retirement age, for example, Luxembourg, their employment rate for those aged 65 to 69, is 7.1%, less than 10%. In the case of Finland, the retirement age is 68, but their employment rate for those aged 65 to 69 is 13.1%. In the case of Sweden, the retirement age is 67 and their employment rate is 21.9%.
What about countries with no retirement age? The UK has no retirement age, employment rate for those aged 65 to 69 is 21%; Australia, 25%; the US, 31%; and Denmark, 15%. All of them, all these countries, even though they do not have a retirement age, their employment rates for workers aged 65 to 69 are all significantly lower than Singapore's 40.4%.
What about workers aged 70 to 74? Eventually, what we hope is that our people can actually continue working for as long as they are able to, and as long as they want to. Looking at the employment rate for those aged 70 to 74, Singapore is 24%. Is that low? Is that high? Again, if we compare it to all these other countries, one country that is much higher than Singapore is Korea, which has 32.3%. I must really visit Korea soon to see how and what we can learn from them. Japan is again higher than us, 25%. But all the other countries are significantly lower. In other words, if we compare the employment rates of older workers aged 65 to 69, and 70 to 74, the tripartite partners in Singapore are very convinced that the way we are doing it is the right way.
The re-employment model is the right model. At the same time, we are not progressing too slowly. In fact, compared to other countries, our re-employment age at 67 is comparable and in fact, higher than many other countries, either going by the re-employment age as in Japan, or the retirement or pension age in other countries.
Therefore, I want to appeal for the support of Members: let us commit ourselves. At the end of the day, here in Singapore, what is our objective? We want to ensure that our economy can continue to grow. We all recognise that for economic growth, we have to support businesses. However, the main objective, the end outcome of economic growth must be translated into employment opportunities for people, young and old, all inclusive.
Jobs represent the best welfare; full employment is the best protection. Therefore, we will continue to evolve the re-employment model and, at the same time, make sure that our re-employment model in Singapore must be both pro-business and pro-worker. If we do not address the interests and concerns of businesses, we will eventually run out of jobs. But yet at the same time, if we do not take care of the interests of our workers, our people will eventually not be able to continue to pursue and live a "H2P2" life.
With that as a backdrop, I will now address some of the points brought up by Members. A related issue is about the CPF Payout Eligibility Age (PEA). Assoc Prof Daniel Goh asked whether we can roll back PEA from 65 to 60. For Member Louis Ng, he asked: with the increase in our re-employment age, does it mean that we are going to adjust the PEA to 67 as well?
Deputy Speaker, Sir, let me explain the current situation. Up until 2012, the link between the retirement age and CPF PEA was direct and identical. It is a point-to-point linkage. So, when the retirement age was 60, PEA was 60. When the retirement age went up to 62, PEA was 62. But in 2012, something happened. The two are still related, but they are no longer identical. They are still related because both are related to the expected lifespan but yet at the same time, I think from 2012, you would notice that even though we raised the re-employment age to 65, the CPF PEA, in fact, went up much slower to 63 in 2012, 64 in 2015, and 65 only in 2018.
The increase in our PEA is already something like six years lagging behind the re-employment age. Something happened again last year. I do not know whether Members noticed. At the recommendation of the CPF Advisory Panel, we amended the rules by which members can draw on their CPF payouts.
Starting from 1 January 2016, CPF members will start their CPF payouts between ages 64 and 70. Come next year, it will be ages 65 to 70 even though the re-employment age is 67. Therefore, the relationship between re-employment age and the age of starting the CPF payouts has already changed. It used to be point-to-point, but now, it is a range. The CPF payout start range is now 64 to 70, and the re-employment age will be 67 by July, within that age band. Next year, the CPF payout start range will be 65 to 70, and again, the re-employment age at 67 is still within that band. There is no longer a direct point-to-point linkage.
I think on this, we are all in agreement. But one point which we are still in strong disagreement is really not about the de-linking, but rather, it is about whether we should reset the PEA back to 60. For this Government, we think it will be the wrong thing to do, given that the life expectancy of our people is getting longer.
Also on the point about letting our CPF members withdraw more money so that they can invest on their own. If Members have been following all the developments, many of the CPF members who had invested their money on their own through the CPF Investment Scheme, or CPFIS in short, have not done better. By putting their money under our CPF LIFE, they can earn an interest rate of at least 4% per year. Therefore, I believe that it is to the best interests of our CPF members for them to keep their CPF retirement money in CPF LIFE.
Please also do not forget that CPF members can withdraw their savings above the Basic Retirement Sum (BRS) if they already have got a sufficient housing charge or pledge in place. In other words, we are not depriving our CPF members from investing their own retirement sum, if they have anything above the BRS for those who have sufficient housing charge or pledge and above the Full Retirement Sum for those without sufficient housing charge or pledge. Therefore, this amendment Bill is about raising the re-employment age. It has nothing to do with the CPF PEA or payout start range which, as I have said, is already fixed at 64 to 70 this year, and 65 to 70 from next year.
On eligibility for re-employment, some Members have expressed concern on whether the onus of proof is on the workers or the employer. I want to make it very clear that the onus is on the employer to show proof. If the employer says this worker is not eligible for re-employment due to poor performance, it is for the employer to show proof. If the employer says that this worker is not eligible for re-employment due to medical reasons, it is for the employer to show proof.
Some Members asked, "What if this company has no performance appraisal system in place?" When that happens, we will tell the employer, "Since you don't have proof, you don't have a performance appraisal system in place, and you don't have proof that this person has not been performing well, year after year, and more than that, along the way, you had not been giving him feedback, suggestions and so on, these cases would be ruled as being unreasonable denial of re-employment". MOM will then come in to either reinstate re-employment or order compensation, based on the situation of the case.
In the case of discrimination, I share the concerns of Members. This is something that we are always on the lookout for. For example, can the employer try to find ways to get rid of a worker just before 62? A worker may come to MOM to complain and say, "I have been working for this company for 10, 20, 30 years; everything went very well. But somehow, three years before I turn 62, everything turned negative." If this worker is a union member, we can ask him or her to approach the union. If he is not a union member, he should come to MOM.
Let me also emphasise that the Retirement and Re-employment Act covers all local workers. There is no salary cap of $4,500. Re-employment is an entitlement that covers all local workers, regardless of whether they are PMETs, high-wage or low-wage workers, they can all come to the tripartite partners or MOM if they feel that they had been discriminated against under the Retirement and Re-employment Act.
Regarding the employees' entitlement on re-employment, again, this is a trade-off between being pro-business and pro-worker. The tripartite partners negotiated and decided to strike a balanced outcome, which is that the core entitlement of workers provided for under the Employment Act should be protected. For example, paid sick leave of 14 days for outpatient consultation and 60 days of hospitalisation are protected. In the case of annual leave, the minimum seven days provided for under the Employment Act, again, is protected.
Some other entitlements may no longer be relevant and so, they are removed. For example, maternity leave. It is unlikely that the re-employed workers would need maternity leave. This is removed.
The question, really, is what about the contractual benefits: medical benefits and other benefits? Contractual benefits have never been part of the Employment Act. In other words, even the Retirement and Re-employment Act cannot protect your contractual benefits. Contractual benefits are bounded through contracts. It applies to all workers, young and old. Whether you are 40 years old or you are re-employed and aged 62, all your employment contract terms depend on what is contained in there; it is a subject of direct negotiation between the employee and employer, or between the union and the management. This will continue.
However, the tripartite partners are still concerned that the older workers, those who are re-employed, may not be in a good position to negotiate for fair terms and conditions. As a result, we have issued a set of tripartite guidelines. The latest revision will be issued later today.
In these guidelines, we will highlight what are considered reasonable terms and conditions. These guidelines are very important because in the situation of any dispute, the employee can come to the Tripartite Alliance for Dispute Management (TADM) for mediation and come to MOM for mediation. If the mediation is not successful, the case can go to the Employment Claims Tribunals (ECT). ECT will make reference to this set of tripartite guidelines. So, if the employer is, indeed, being unreasonable in terms of the terms and conditions and, after mediation, we could not succeed in a resolution and the case goes to ECT, ECT will make reference to this set of tripartite guidelines and rule whether the terms and conditions offered upon re-employment are reasonable. I want to assure Members of this House that the tripartite partners take this very seriously. ECT will come into effect on 1 April, before the re-employment age of 67 comes into effect.
On the issue of a new option for a second employer, some Members are concerned about what would happen if the second employer is not able to fulfil the commitments of the first employer. So, they asked if there is a way out for the second employer. First, I want to assure the Members that the consensus of the employee is a mandatory condition. If the worker does not feel comfortable, then he does not have to accept this offer. Once the offer is accepted, the second employer will have to fulfil all the obligations of the first employer.
For example, a Member mentioned about what would happen after one year, the worker is subsequently not offered re-employment at 63, after having been offered re-employment at 62. At the point of 63, if the worker is not offered re-employment, the second employer would have to pay the worker EAP. No difference from the first employer. Before the second employer can offer to pay EAP, the tripartite partners will come in to scrutinise whether this is the last resort. Remember that EAP is a last resort. Mr Patrick Tay highlighted this.
We will be monitoring very closely to ensure that there is no abuse of EAP. I am happy to say that in the five years of the Retirement and Re-employment Act, we have not come across too many cases; just a handful. The large majority does not have this issue of abuse of EAP. As such, we believe the second employer will be tightly bounded by these criteria and conditions.
On the question about whether workers should be told much earlier if they are not eligible for re-employment, our tripartite guidelines stipulate that whether a person is eligible or not eligible for re-employment, he should be notified at least three months in advance, the longer the better. Mr Zainal Sapari asked if the notice period can be one year. The unionised sector can try. The guidelines dictate at least three months' notice for eligibility, and mutual consultation for at least six months prior to re-employment or extension of re-employment. We think that is sufficient but let us do more.
On the payment of EAP, I agree fully with Mr Patrick Tay that we must have a safeguard in place to prevent abuse. As I mentioned, we watch it very carefully, and so far, so good. We will continue to monitor the situation.
In terms of the review of the quantum of EAP, we just reviewed it this round. Having extended the re-employment period from three to five years, the EAP quantum would be higher now, in the event the employer is not able to offer re-employment. This is already in our guidelines.
Business concerns are real. We take business concerns very seriously because we recognise that re-employment can only work if it is a win-win outcome. We have been in very close consultation through SNEF to take into account all the feedback. We will continue to provide support, not just through this scheme, but through the overall package that is coming up.
Assoc Prof Randolph Tan asked what if a company in financial hardship is not able to pay EAP. Those cases can go to Employment Claims Tribunal and the Tribunal will then rule, after they have seen whether the company is, indeed, in such great difficulty that it is not able to pay the EAP. There is a mechanism to resolve this.
Ms Jessica Tan asked whether we can do something to help and encourage employers to re-employ the older workers, including those not eligible for re-employment till 67. The answer is yes, we are actively looking into this. The decision on the extension, what form, what coverage of this additional wage offset will be decided soon, well ahead of the 1 July implementation date.
Last but not least, I share the views of many Members here that at the end of the day, the true success of re-employment depends a lot on how we value our older workers and how we redesign their jobs. I am very happy to hear the Labour Members repeating the call for "ESS", or making our jobs "Easier, Safer, Smarter". We are 100% aligned on this.
Last year, we enhanced WorkPro for job redesign. I am still looking for more ways to encourage greater adoption. Many countries have done something, so there is a lot that we can learn from.
Mr Melvin Yong asked about whether the Public Service can take the lead on re-employment. The answer is yes. Actually, the Public Service was the first one to adopt the re-employment age of 67 way back in January 2015. It has been about two and a half years ahead of the law. I also agree with Mr Heng Chee How that we should look at different ways to make "progressive workplace practices" more prevalent across the board.
Mr Deputy Speaker, Sir, I hope I have addressed most of the issues brought up by Members. I also want to assure the Members that many of their good suggestions will be taken note of by the tripartite partners and will be incorporated in our implementation. At the end of the day, just because we have succeeded in re-employment in the first five years, from 2012 to now, it does not mean that the way forward will be smooth.
The tripartite partners are concerned that as we raise the re-employment age, the higher the re-employment age, the more challenging it is going to be. Therefore, we have to find ways on the one hand, to make sure that the workplace becomes more age-friendly so that the older workers will be able to remain productive and help companies to remain competitive; at the same time, we must also take good care of our older workers in terms of employability and welfare.
We believe that by working together, we can continue to ensure that employment rates of our people aged 65 to 69, 70 to 74 and above, will always be among the highest in the world. On that note, I beg to move.
Mr Leon Perera.
I thank the Minister for his answers. Just a few brief clarification questions. First, with regard to the possibility of discriminatory employment practices, the Minister cited an example of ageism, everything going bad in the last three years and how the employee in that case can go to MOM. My question is: what will MOM do at that point? I suppose MOM will look at the case and see if it contravenes the Retirement and Re-employment Act. Would MOM also look at that company in a more systematic way? The reason I mention this is because of the "double weak companies". For those who discriminate against Singaporeans, there is a so-called framework where you look for other evidence or a pattern of discrimination, who are the people they have hired over time and so on. Does MOM do that now in cases of ageist discrimination and other kinds of discrimination, or will it consider doing so in the future if it does not do so now?
The second and last question is: the Minister talked about the link between countries which have a higher or no retirement age and the labour force participation of those aged 65-plus. I am wondering: why do the tripartite partners feel that raising the retirement age or eliminating the retirement age reduces the labour force participation? I am wondering if there is really a causation or could it just be a correlation. There could be other reasons countries like the UK and the US may have lower post-65 labour force participation; they could have more generous defined benefits and pension schemes, for example. It may not be just the raising of the retirement age that is the thing that lowered the labour force participation.
Mr Deputy Speaker, Sir, on the first point, the answer is yes. Currently, all complaints are investigated by TAFEP. Once TAFEP does the investigation, if it discovers that it is not an isolated incident but rather it is a more pervasive HR practice of the company, then TAFEP will watch the company more closely and we will continue to work with them to work through that. The answer is yes.
Having said that, let me also assure Members that the incidence of discrimination of all forms, based on the cases we see at TAFEP, is still low. Of course, we will take every case seriously.
The second point about the retirement age, as I had mentioned, the key difference between the retirement age and re-employment age is that retirement age involves same job, same pay. Re-employment age is not necessarily the same job, not necessarily the same pay.
Let me give an example. I will not name this company but it is a company that I know. The senior management has been ageing. When we introduced re-employment up to age 65, the employees and the union asked the management how this would affect the renewal of the senior management in the company. The Chairman and CEO, in consultation with the top management of the company, about 20 to 25 of them, they came to a collective decision. They decided that in this company, all senior management of certain positions, on a voluntary basis, will exclude themselves from re-employment. They are very determined and said that leadership renewal for their company is critical to their sustained success. So, on a voluntary basis, they excluded themselves from re-employment.
The difference between re-employment and retirement really is about mindset; about how are we going to be able to continue to address the concerns of businesses and, at the same time, also address the concerns of the younger workforce in terms of their career advancement; and, at the same time, address the concerns of the older workers for wanting to continue to be re-employed.
So far, most countries still go for retirement age. To the best of our knowledge, Japan and Singapore are the only two on the re-employment model. The results, so far, I would say, seem to be more positive because the employment rates in Japan and Singapore are relatively higher compared to other countries. But the Member is right that this cannot be the only reason. It could be many other reasons and that is why in Singapore, we make sure that all the conditions are right, are conducive to be supportive of re-employment. It is not easy. Through tripartite efforts, I believe we can continue to make progress.
I shall put the question.
Question put, and agreed to.
Bill accordingly read a Second time and committed to a Committee of the whole House.
The House immediately resolved itself into a Committee on the Bill. – [Mr Lim Swee Say].
Bill considered in Committee.
[Deputy Speaker (Mr Lim Biow Chuan) in the Chair]
The citation year "2016" will be changed to "2017", as indicated in the Order Paper Supplement.
Clauses 1 to 11 inclusive ordered to stand part of the Bill.
Bill reported without amendment; read a Third time and passed.
PAPERCUTS