1. Like many other developed countries, Singapore is ageing. The median age of our workforce has increased from 35.1 in 1994 to 38.8 in 2004. The proportion of older workers aged 40 years and above has also risen steadily.
2. However, the employment rate of older workers here did not increase significantly. Today, the employment rate of workers aged 55-59 years is only 55%. For those aged 60-64 years, it is even lower at 35%. A substantial proportion of older workers are either not working, or unable to find jobs. Statistics have also shown that older workers find it harder to regain employment when they lose their jobs.
3. On the other hand, people are living longer. If people are stopping work in their 50s, this means that they will have to accumulate enough funds through 30 plus years of work to sustain them for 20 to 30 years of retirement. Is this realistic for most people? How many people can say their funds are sufficient? What happens when they are unemployed for long periods of their working life? The financial strain on the younger generation will grow as there are fewer working children to share the responsibility of looking after old parents who can expect to live longer.
4. The problem is particularly acute for women. Only about half of the female population is working or looking for work at the age of 50 to 54. In the 55-59 years age group, this drops to about 40 per cent. By the time they reach the age of 60 to 64, this figure drops further, below 20 per cent. Many of them would have even less savings than men to sustain them through retirement. On the other hand, they generally live longer than men.
5. There is one practical solution, and that is to ensure that workers are able to continue working for as long as they need or want to, if their health permits. In particular, we must focus our attention on helping more women return to gainful employment. In short, we want to raise the employment rate of older workers and to raise the effective retirement age. Being gainfully employed not only raises the financial standing of older workers, it also keeps them meaningfully engaged with mainstream society and improves their sense of dignity and self-worth.
6. For employers, this also poses an interesting challenge and opportunity. Many employers view older workers as a potential liability. But how often have we focused on the positive attributes of older workers? Companies in developed countries like the US have discovered the advantages of leveraging off the attributes of older employees, such as loyalty, commitment, superior interpersonal skills, patience and calmness borne of experience. They have also found that having older employees is an advantage when serving a clientele that is also ageing. This wave has yet to catch on in Singapore. We have to start this wave, and help employers see the advantages in being a first mover in employing older workers.
7. Some of you may wonder why we do not simply advocate for a higher legal retirement age. We raised the legal retirement age in 1993 and 1999. This has produced limited results. The employment rate of men has not changed since 1980; the legislation merely arrested a downward trend, and achieved a minimal reversal. Most of the improvement in labour force participation came from more women staying in or rejoining the workforce. Hence, we do not think that raising the legal retirement age again will bring about a big improvement.
8. Indeed, instituting yet a higher legal retirement age can even potentially disadvantage older workers. Employers would think twice before employing or retaining an older worker because of the potentially longer ‘liability’ and higher wage costs of older workers. It can also speed up the pace of business restructuring, outsourcing and retrenchment on the ground, with older workers bearing the brunt of the impact.
9. The labour movement therefore believes in raising the effective retirement age because this encompasses working with willing employers to find out the specific problems and concerns that they have in employing and retaining older workers. Only then can we find practical, win-win solutions to overcome these issues and more importantly, work with employers to employ older workers and subsequently retain them past the statutory retirement age. We believe this is a more concrete, effective and permanent solution.
10. Raising the effective retirement age was discussed extensively as a key concern of the labour movement at our Ordinary Delegates Conference last year. We have re-affirmed this as one of NTUC’s key priorities for 2006.
11. So what has the NTUC done to help older workers?
12. Through our Job Re-creation Programme, we have worked with companies in 16 sectors to re-design jobs to increase their value-add and make them more attractive to Singaporeans. We have also enhanced our training support for older workers. In doing so, we helped to expand the range of job opportunities for our older workers. With the launch of the ADVANTAGE! scheme, we call upon more employers to leverage off the financial support offered by the scheme and work with the labour movement to redesign jobs for older workers.
13. The labour movement understands that cost-competitiveness is a key concern for employers. We have a seniority-based wage system in Singapore, with older workers paid more than younger ones for doing the same job. This is one major impediment towards retaining and employing older workers.
14. We believe that one way to address employers’ concerns on cost-competitiveness of older workers is to move towards a performance and competency-based wage system. After removing the cost disparity between older and younger workers due to seniority, employers should then undertake to offer re-employment opportunities for their workers who have reached the retirement age. This has been implemented in some of the leading companies in Japan. As the Japanese also had an entrenched seniority-based wage system, we felt that this, too, can be a workable model for Singapore.
15. Implementation will not be easy. This requires a mindset change amongst employers and HR professionals on how to motivate and retain employees. Employees also have to adjust their expectations, from a system where they have become accustomed to permanent increments added to their salary every year, to one where their salary is largely determined by their output, value-added and competency levels year after year. In addition, employees also cannot expect to continue to do the same work, and enjoy the same terms and conditions if they take up the offered re-employment opportunities after retirement. In other words, the new system requires a strong level of trust between employers, employees and unions for it to work.
16. So far, about 50 companies have come forward to work with us to implement a performance and competency-based wage system, complemented with re-employment policies to employ or retain older workers past retirement. Some of them will be sharing their experiences with you later today. This is a good start and is most encouraging. However, much more still needs to be done.
17. We hope that the positive outcomes from our initial work can serve as a catalyst for more companies to come forward to work with us. Only when the biggest employers in Singapore are willing to adopt this system, can we see a permanent shift in the landscape towards a more performance-based wage system and better employment opportunities for older workers.
18. The Tripartite Committee on Employability of Older Workers have released their recommendations on raising the employment rate of older workers. What I have outlined are some of the concrete work and strategies on the ground that NTUC has initiated towards achieving these same goals. The journey ahead is a long one, and we have only just started on the first leg of the marathon. The NTUC alone cannot bring about a higher effective retirement age. We need our tripartite partners to work hand in hand with us on this journey.
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For media queries, please contact:
Ms Lim Beng Gii
Senior Executive
Corporate Communications Department
National Trades Union Congress
DID 6213 8186
HP 9645 4742
Email limbg@ntuc.org.sg
Goy Kae Lip
Consultant
Corporate Communications Department
National Trades Union Congress
DID 6213 8184
HP 9792 0650
Email goykl@ntuc.org.sg
