Wednesday 1 October 2014

Rehiring past 65: Incentives for firms which voluntarily re-employ older workers up to 67

Incentives for firms to re-employ workers past age 65
By Janice Heng And Linette Lai, The Straits Times, 30 Sep 2014

FROM next January, incentives will be given to companies that voluntarily rehire workers past age 65, before legislation kicks in to raise the re-employment age to 67.

This "promotional approach" was suggested by a tripartite committee and accepted by the Government yesterday, said the Ministry of Manpower (MOM).

Details of the incentives are now being worked out by MOM, together with the Finance Ministry and tripartite partners which include employers and unionists.

These will be announced next year but backdated to Jan 1, 2015.

But the labour movement, especially, has been calling for the age to be raised to 67.

Since late last year, the Tripartite Committee on Employability of Older Workers (Tricom) has been studying the question of when this should happen.

After consulting stakeholders such as unions and employer groups, Tricom recommends that the Government use incentives to coax companies to do it before legislation eventually kicks in.

It also issued guidelines in a Tripartite Advisory on Re-employment of Employees from Age 65 to 67, for employers that want to do it.

The labour movement welcomes and supports this advisory, National Trades Union Congress (NTUC) deputy secretary-general Heng Chee How said last night.

"Starting with promotion is not new," said Manpower Minister Tan Chuan-Jin, noting that the same approach was taken in 2012 to encourage firms to rehire older workers when they turn 62.

Mr Stephen Lee, immediate past president of the Singapore National Employers Federation, said the news should cheer bosses, who feared the legislation would kick in "too soon".

"We therefore welcome the time given to help employers to manage their older workers over the next few years before legislation sets in," he added.

Incentives will also help companies make the transition, said Association of Small and Medium Enterprises president Kurt Wee.

As for what these could be, Mr Wee said: "It can't get better than a kind of direct wage subsidy for older workers."

He noted that companies already have other forms of help, like funding to make workplaces and processes elder-friendly.

Older workers like administrative assistant Indra Mohan think the incentives are a "wonderful" way to nudge companies to keep their older workers.

"(This news) is a huge relief to many who are waiting and wondering what's going to happen next," said the 64-year-old.

Singapore's largest employer, the public sector, however, is taking the lead. It will re-employ its officers up to age 67, Deputy Prime Minister Teo Chee Hean, who is Minister-in-charge of the Civil Service, said in a statement.

The Public Service Division will announce the details, he added, without specifying when.

Its move was lauded by NTUC's Mr Heng: "This sends a strong signal to the other employers and we hope that many would emulate (its) example as soon as possible."

More incentives for first movers on higher rehiring age
By Halimah Yacob, Published The Straits Times, 3 Oct 2014

THE Government has accepted the recommendations of the Tripartite Committee on Employability of Older Workers to raise the age ceiling for the re-employment of older workers to 67 from 65. This will be done through promotional means supported by incentives. The idea is to give companies more time to prepare for this before legislation kicks in. The legislation will be introduced at an "appropriate time".

The PAP Seniors' Group (PAP.SG) welcomes this move, which is a progressive step and will help to boost the employment prospects of our older workers. The Government has moved to bolster the position of our seniors in health care and housing through its recent policy changes, and it makes great sense now to focus on employment. This is an important way of ensuring that our seniors remain independent and can continue to live with dignity. To be able to work for as long as they wish to and earn a steady stream of income is greatly empowering for our seniors.

Raising the rehiring age to 67 is not just good for the individual. It also makes great economic sense. It is projected that by 2030, there will be 900,000 people aged 65 years and above. If our total fertility rate remains at 1.2 and we have no immigration, there will be only 2.1 working age citizens for every citizen above the age of 65 in 2030. If we do not extend the productive working age of our older workers, our growth will be affected.

Companies, too, benefit, and much has been said about the value of older workers. In a survey conducted last year by the Tripartite Alliance for Fair Employment Practices, the majority of the companies which responded agreed that mature workers benefited them through lower turnover rates and reduced absenteeism.

While promotional means is a practical solution to give employers more time to adjust, I do hope that the Government will not take too long to legislate the extension. I have no doubt that the unions will be able to push through the extension among unionised companies, but the worry will be the non-unionised companies, where this may not be a priority. To some extent, the proposed incentives may help and are a good move, as most employers have cited costs as a concern, but the question is whether this will provide enough push for companies to voluntarily raise the ceiling.

I also hope that incentives will not have the unintended consequence of devaluing the contribution of older workers, particularly for those who would be re-employed in any case because their services are needed.

Nevertheless, to really ensure that the incentives have an impact, the Government could consider introducing a sliding scale of benefits, whereby those who come on board earlier are given more incentives compared to those who respond later. In this way, hopefully, most companies would be encouraged to raise the rehiring age ceiling faster.

According to employers, they need more time to redesign jobs and work processes and to retrain older workers. I find this surprising as such measures should already have been put in place when the rehiring age ceiling was raised to 65. There cannot be that many major changes that have to be made for the working age to be increased by just an additional two years.

Also, employers' concern about medical costs should, to a large extent, be addressed by MediShield Life that comes into effect next year, as a larger portion of hospitalisation charges will be covered. Hence, prudent employers may want to rationalise their own medical benefits scheme with MediShield Life, to address this concern.

The training of older workers is another major area in ensuring that their skills remain relevant and useful to companies' needs. There are now already available training grants and programmes that companies can tap to prepare their older workers, so that lack of skills should not be an excuse. The tripartite partners could also do a lot more to highlight positive examples of enlightened companies that have voluntarily raised the rehiring ceiling, even without any incentives.

One example is Prima. A few years ago, I officiated at an event where the company gave out long service awards to its employees. There were employees who had served the company for more than 40 years and were in their 70s. It felt really good to see a company that values its workers so much. In August last year, Prima signed a collective agreement with the Food, Drinks and Allied Workers' Union to offer 65-year-old workers, with satisfactory performance and good health, employment contracts until age 68.

I urge more companies to emulate Prima's example and waste no time in raising the rehiring age ceiling of their older workers. I am heartened, too, by the public sector's positive response to the recommendation, as its hiring practices have a deep impact on the private sector.

Finally, we need to address the concerns of older workers who have lost their jobs and are trying to get back into the workforce, which the recommendation will not cover. Among their biggest hurdles in seeking employment are hiring practices that are still biased against them. Employers should be prepared to give them a chance, rather than turn them away just because of their age.

I would like to suggest that companies hiring unemployed older workers be given incentives too, and not only those who raise the rehiring age ceiling of existing workers. It would also be useful to conduct a study on the hiring practices of companies to ascertain whether this bias really exists or whether there are other valid factors involved that affect the hiring of older workers. In this way, more effective strategies could be developed to boost older workers' chances of securing a job.

The tripartite partners have made a good move. The challenge now is to make sure that the recommendation works.

The writer is the Speaker of Parliament and chairman of the PAP Seniors' Group.

Rehiring past 65: Key worry is about costs
Wage and medical care subsidies would be helpful, say employers
By Amelia Tan, Joanna Seow and Marissa Lee, The Straits Times, 1 Oct 2014

EMPLOYERS are receptive to rehiring workers past 65 but are worried about the costs of doing so.

They flagged wages and medical bills as the main challenges in rehiring older workers and are hoping for subsidies that could help alleviate the burden.

The firms were reacting to the Manpower Ministry's announcement on Monday that from next January, incentives will be offered to firms that voluntarily rehire workers past 65.

Currently, companies are required by law to offer re-employment to eligible workers when they turn 62, up to the age of 65.

Most of the 12 bosses who spoke to The Straits Times said they were open to rehiring older workers, in the light of the tight labour market.

"Older workers are valuable... but employers are worried about the costs," said Mr Brenton Ong, director of human resources at Concorde Hotel Singapore.

More firms will voluntarily rehire workers beyond 65 if they get financial help to pay for the treatment of chronic illnesses which older workers are prone to suffer from, he said.

Other employers suggested wage subsidies of between 10 and 25 per cent for older workers. These will allow them to offer higher salaries and cut down on working hours.

"If we re-employ workers we may have to rework salary levels because their efficiency or productivity may not be as high," said Mr R. Dhinakaran, managing director of lifestyle and fashion retailer Jay Gee Melwani Group.

Mr Edlan Chua, chief operating officer of Chinese restaurant chain Paradise Group, added: "Some older workers may be working 44 hours a week. With a wage subsidy, we can offer them the same pay but they can work, say, 36 hours a week."

Other employers suggested that training courses can help to ensure that older workers have relevant skills.

"Their skills may need to be updated, and this will benefit both employers and employees," said Mr Jimmy Fong, executive chairman and CEO of Apple reseller chain EpiCentre.

The incentives should lead to real change, said National Trades Union Congress (NTUC) deputy secretary-general Heng Chee How. "We hope to see a change in legislation to raise the re-employment age to 67 soon. But there is no consensus yet on the timing of the change," he said.

It could take a while before companies are ready for a change, said Senior Minister of State for Health and Manpower Amy Khor on the sidelines of an event yesterday.

"Not so many firms are prepared to employ beyond 65. So we need to give them time to adapt to the upcoming change," said Dr Khor, who heads the Tripartite Committee on Employability of Older Workers.

For older workers who want to work beyond 65, their main worry is taking a pay cut. Said private school lecturer William Loh, 61: "If you're doing the same job, companies have no right to reduce remuneration. Just because I'm older doesn't mean I will lecture less or mark fewer papers."

Others hoped that their employers will continue to offer them medical benefits, such as paying doctors' fees and medicine.

Mr Teoh Ah Kian, 62, a baker at Giant supermarket at IMM Mall, said: "We also get dental benefits, so this helps to reduce my expenses."

Some suggestions
- Employers say that more firms will voluntarily rehire workers beyond 65 if they get financial help to pay for the treatment of chronic illnesses which older workers are prone to suffer from.
- Other employers suggested wage subsidies of between 10 and 25 per cent for older workers. These will allow them to offer higher salaries and cut down on working hours.

Wanted: 500 firms to rehire workers aged above 65 by end-2015
By Amelia Tan, The Straits Times, 1 Oct 2014

The labour movement aims to get about 500 unionised firms to voluntarily rehire workers past the age of 65 by the end of next year.

National Trades Union Congress (NTUC) deputy secretary-general Heng Chee How said the labour movement will reach its goal by ramping up efforts to promote the benefits of re-employing older workers to firms.

"In the coming year, we will be urging more firms to rehire older workers. They have a wealth of experience to offer," he told reporters on Wednesday night at the sidelines of a dinner at Swissotel Merchant Court for around 200 mature workers.

"We are confident of reaching our goal of getting 500 firms to say yes by the end of next year."

His comments comes after the Manpower Ministry's announcement on Monday that from next January, incentives will be offered to firms that voluntarily rehire workers past the age of 65.

Details of the incentives are now being worked out. They will be announced next year but backdated to Jan 1, 2015.

Currently, firms are required by the law to offer re-employment to eligible workers when they turn 62, up to the age of 65.

Mr Heng said the introduction of the incentives will help the labour movement to reach its eventual goal of changing legislation to raise the re-employment age to 67.

"We think that more firms will be willing to rehire older workers with the incentives. With greater tripartite consensus, we will be better able to make a change in legislation."

Older workers at the event said they are thankful that their companies have rehired them after they turned 62.

Crane operator Chiam Ah Kow, 70, who works at PPL Shipyard at Pandan Loop, said: "My company treats me well. I earn about $5,000 a month with overtime pay and get leave and medical benefits. I want to work for as long as possible."

Age-proofing workplaces
Editorial, The Straits Times, 3 Oct 2014

THE economic and social logic of re-employing able and fit workers till age 67 should obviate the need for legal coercion. Yet, such is the weight of ageist notions and legacy systems, like seniority-based wage practices, that many employers still see themselves yoked to a liability when obliged to do so.

Hence the promotional approach recommended by the Tripartite Committee on Employability of Older Workers (Tricom) to bring more bosses on board voluntarily before that obligation becomes law. It took five years of exhortation before legislation was implemented in 2012 for bosses to re-engage their workers from age 62 up to 65. There is no reason for Tricom to take as long for the latest age extension.

A confluence of factors throws into sharp relief the business logic of viewing human resources holistically rather than stereotypically. In a labour-tight market, characterised by skilled foreign worker curbs, the experience of mature workers ought to be viewed as an asset.

Companies elsewhere with the organisational will and imagination have demonstrated how even a so-called "pensioners line" in a plant can achieve productivity levels of younger teams. An experiment by BMW saw work improvement resulting from shopfloor changes initiated by older workers themselves, including the addition of more user- friendly computers and wood floors to reduce knee strain. The extension of these changes, requiring just modest investments, to its other factories in Germany, Austria and the United States has led to similar productivity gains.

A tripartite effort here to promote better age management practices has highlighted various benefits that employers can derive. These include meeting labour shortages with less effort (given existing mature staff's familiarity with work processes), leveraging in-house experience and expertise, helping to promote organisational loyalty, and strengthening the brand by adhering to fair and socially enlightened policies.

State funds were earlier made available to employers to help them adapt human-resource systems and redesign jobs for seniors. Wage support schemes are also being sought. But how long can these continue?

Companies will have to be adept in operating willy-nilly in a world that is greying at an unprecedented rate. The number of workers supporting each German pensioner by 2030 will be 1.5 - half the number today. Here, for every person aged 65 and over there will be 2.1 working-age citizens, compared to 6.3 now aged between 20 and 64. There will be both economic opportunities and challenges in a middle-aged society, with a median age of 47 in 2030. For businesses to be future-ready, these issues have to be addressed now.

Firms explore ways to curb medical costs
One option is to offer a pay package that offsets higher insurance costs
By Mok Fei Fei, The Straits Times, 13 Oct 2014

BUSINESSES in Singapore remain supportive of the push to keep employees on beyond 65 years of age, amid the country's ongoing labour crunch.

To manage the expected higher medical costs of rehiring older workers, they are exploring ways to tap medical insurance, company bosses told The Straits Times.

Mr Jeremy Fong, managing director of Fong's Engineering, which makes medical devices, noted the higher costs associated with older staff, who may fall sick more easily.

"The overall costs would increase and no employer is happy about that because it comes back to competitiveness for the company," he said.

One option is to negotiate the overall pay package of the older worker and lower his salary slightly to offset the cost of the medical insurance coverage, he said.

Fong's Engineering has a staff of 130, with one employee aged above 65.

One company that has been able to tap medical insurance for its workers, including older ones, is restaurant chain Han's.

About 15 per cent of the firm's 460 employees are over 65 and they are covered by medical insurance.

Han's general manager Gan Yee Chin said the company's annual medical insurance costs have risen considerably from about $30,000 a decade ago to some $250,000 now.

The jump was caused by a host of factors, including having more and older workers as the company expanded.

Another factor was higher premiums per worker, he said.

Instead of focusing on the overall quantum of the medical insurance cost alone, Mr Gan said Han's keeps the insurance cost as a proportion of turnover at below 1 per cent. This helps the management to keep an eye on the workers' contribution to the business' top line, not just their costs.

"We can see the benefits and value-add that the older workers bring. Many of the older workers are quite healthy, so the claims in their medical history are not so high," added Mr Gan.

However, some existing workplace medical insurance arrangements do not cover older workers.

Surface finishing firm Cel Coating Industries, which employs 85 people, buys medical insurance for its staff, said director Pauline Shu.

But one issue the firm is facing is that the current group insurance policy does not cover its two workers above 65.

"They have no coverage, so when they go see the doctors, or are hospitalised, the company covers the medical costs," Ms Shu said.

"It adds on to the costs, but not all costs are measured in dollars and cents because they are part of the family and they have given much to the company."

The Government has led a push to encourage firms to voluntarily rehire workers past the age of 65 before legislation kicks in to raise the re-employment age to 67.

Giving firms help to foot the medical costs of older workers, such as subsidies for insurance premiums, has been mooted by bosses as a possibility to incentivise more firms to rehire older workers.

A worker above 65, however, will enter into a new insurance coverage age band that typically places them in the 66 to 70 years old grouping, entailing a hike in insurance premiums.

Insurers say group insurance policies, unlike individual policies, can smooth out the spike in premiums for older workers.

Tokio Marine Life Insurance Singapore chief executive Lance Tay said: "Unlike the premiums paid by individuals, which can vary greatly based on the age profile, the insurance premiums to be paid for an older worker would not have a large impact on companies because the age profile of a company's workforce tends to change very gradually from year to year."

He added that firms can consider cost-saving features such as co-payments by workers in the group insurance programmes.

Some group policies could also cover workers up to 70 or beyond. Premiums for such policies would also take into account other factors like claims history, not just age.

Ms Susan Ong, senior manager for the group and health division at NTUC Income, said: "While a group that has a larger group of older policyholders is more likely to make more claims and, as a result, worsen the claims experience, age is in itself not a key determining factor of group insurance premiums."

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