Wednesday, 11 January 2017

Re-employment age to be raised from 65 to 67 with effect from 1 July 2017

Retirement and Re-employment (Amendment) Bill 2016 passed by Parliament

Older workers can work until age 67 from July
In another change, employers won't be allowed to cut salary of staff who turn 60
By Toh Yong Chuan, Manpower Correspondent, The Straits Times, 10 Jan 2017

Older workers will be able to work until age 67 from July this year.

If employers cannot find work for such workers in their companies, they can transfer them to their subsidiaries or another employer with the workers' consent, or give them a one-off payment as a last resort.

Employers will also not be allowed to cut the salary of workers who turn 60 from July.

These changes to the Retirement and Re-employment Act, passed in Parliament yesterday, will apply to Singaporeans and permanent residents who turn 65 from July.

Employers will be required to re-hire these workers if they have satisfactory work performance and are healthy and able to continue working.

The move will benefit the increasing ranks of older workers who want to continue to work, said Manpower Minister Lim Swee Say.

The proportion of residents aged 60 and above in the labour force increased from 5.5 per cent in 2006 to 12 per cent in 2015.

"As we live longer, we can expect this proportion to continue to grow," Mr Lim told the House.

Allowing employers to transfer older workers to another employer benefits both workers and employers, he added. "The employee will have more opportunities to be re-employed... The second employer will benefit from hiring an employee with experience," he said.

On removing the law that allows employers to cut the pay of workers at age 60, Mr Lim said that joint efforts by unions, employers and the Government have been successful in getting companies to move away from a wage system where they peg salaries to years of service.

The wage-cut provision was introduced in 1999 when the retirement age was raised from 60 to 62 to help employers manage their wage bills. But by 2011, this was already not practised by 98.5 per cent of companies with employees aged 60 and above, said Mr Lim.

Several MPs also called for safeguards to ensure that employers do not abuse the flexibility the new law gives them.

Labour MP Patrick Tay (West Coast GRC) urged the Manpower Ministry (MOM) to monitor employers who may abuse the new provision that allows them to transfer workers to another employer, as there may be cases where "the terms, conditions, environment and nature of work in the new job may vastly differ from what they had been previously employed in".

Non-Constituency MP (NCMP) Leon Perera said the law does not require employers to state reasons for terminating employment contracts, thereby allowing employers to discriminate against older workers and dismiss them without leaving a paper trail.

Labour MP Zainal Sapari (Pasir Ris-Punggol GRC) was worried that subsidiaries the workers are transferred to might manipulate the re-hiring terms after the transfer. He suggested holding the main employer responsible for the older workers, even after the transfer.

Mr Zainal and NCMP Daniel Goh called for the retirement age of 62 to be done away with completely, given that the re-employment age is being raised from 65 to 67.

Responding, Mr Lim said that the MOM will monitor the implementation of the law closely to prevent abuses.

On doing away with the retirement age, Mr Lim said that re-employment differs from retirement in that while it allows a worker to keep working, the worker need not be re-hired to do the same work or be receiving the same pay.

The minister also disclosed that the Government is reviewing the wage subsidies it currently gives to employers who hire older workers.

The incentives will expire in July and a decision will be made "well ahead" of that month, said Mr Lim.

Yesterday, the National Trades Union Congress, Singapore National Employers Federation and MOM also issued updated guidelines to help employers prepare for the changes from July.

The guidelines were similar to what the three parties issued in May last year.

The one-off Employment Assistance Payment or golden handshake for workers aged 62 when employers cannot re-hire them is set at 3.5 times the monthly gross salary, and between $5,500 and $13,000.

The amount of the payment, which is provided for but not spelt out under the law, is at the discretion of the employer.

More older residents being helped in job search
By Joanna Seow, The Straits Times, 10 Jan 2017

Older residents make up a growing proportion of job seekers being helped into new jobs by government- and labour movement-supported career centres, Manpower Minister Lim Swee Say told the House.

Job seekers aged 50 and above made up about four in 10 of the over 11,000 job seekers placed by career centres run by Workforce Singapore and the National Trades Union Congress' Employment and Employability Institute (e2i) in the first nine months of last year, he said. This is an increase from this age group making up about three in 10 of job seekers placed 10 years ago.

At the same time, the unemployment rate for residents aged 50 and above rose from 2.1 per cent in September 2014 to 2.3 per cent in September last year, said Mr Lim, in response to questions from MPs.

Dr Lim Wee Kiak (Sembawang GRC) said he has seen more residents seeking job help, and those above 40 find it especially hard to find a new job should they be retrenched. "Even if they find a job, usually the pay is much lower than where they were (getting) previously," he said, adding that some residents had complained about being hired by bosses who take advantage of government schemes, only to fire them three months later.

Non-Constituency MP Leon Perera also asked how successful government-supported job fairs have been.

Mr Lim said the number of job placements each year through career centres and other programmes fluctuates depending on the number of job seekers, but has averaged over 16,000 annually from 2007 to last September. For the past three years, the number of placements was 17,500 in 2014, 16,600 in 2015 and 14,900 for the first nine months of last year. He said: "We don't turn away job seekers, so (if) job seekers need help, they have to come to us, and then we respond accordingly."

Mr Lim added that there were more than 90 job fairs last year, which typically see about 400 jobs on offer and "hundreds and thousands" of job seekers. The ministry does not track all fair visitors, he said, as some could be researching available opportunities while employed.

Special attention is being paid to people who are long-term unemployed, or out of work for over six months. The Ministry of Manpower (MOM) is working with other agencies to look at strengthening the Adapt and Grow package of career help this year, he added.

"MOM will continue to work closely with tripartite partners to extend support to all local job seekers as we go through this period of economic transition," he said.

No perfect time to change a law, but good to plan ahead
By Janice Heng, The Straits Times, 10 Jan 2017

When is the best time to change a law? That question cropped up during debates on both the Bills that were up for a second reading in yesterday's Parliament sitting.

Even if a piece of legislation is sound in principle, the timing of its implementation can raise concerns. Ms Foo Mee Har (West Coast GRC), for instance, supported moves to better protect retail investors in the Securities and Futures (Amendment) Bill, even asking if the penalties were punitive enough. But she also raised concerns about the timing of the Bill. In the current poor economic climate, she said, the "overwhelming number and rate of regulatory changes" can exact "heavy compliance costs".

Relationship managers in banks are already struggling to comply with previous changes, she added.

Similar concerns were raised by MPs in the debate on the Retirement and Re-employment (Amendment) Bill.

From July 1, employers will have to rehire older workers up to age 67, if they have satisfactory work performance and are fit to work. A firm can also transfer the workers to another company, with their consent - failing which the employer must offer a payment.

While MPs recognised the value of older workers and supported efforts to ensure their employment, some raised concerns about the timing of the Bill and its impact on firms in today's weak economy.

Nominated MP Randolph Tan, an economist from SIM University, was concerned about the regulatory burden the changes could put on small and medium-sized enterprises in particular, which might not have the manpower to cope.

NMP Thomas Chua, president of the Singapore Chinese Chamber of Commerce and Industry, noted that in the current economy, many industries are restructuring and shedding workers. At the same time, the productivity push is also about reducing the need for manpower.

Yet under these circumstances, the Government is asking firms to find a role for older workers "even if there is no position available", or pay a "substantial amount" instead, said Mr Chua.

Businesses can continue to provide jobs - including those for older workers - only if they are doing well, he concluded.

Yet for other MPs, these changes have come too late. Workers' Party Non-Constituency MP Daniel Goh observed that back in 1993, when Parliament raised the retirement age from 55 to 60, the Government also aimed to raise it to 67 within a decade. He said that only 23 years later has the target age - now for re-employment rather than retirement - been reached.

He asked: "How many senior Singaporeans who had wanted to work longer have lost many good working years as a result?"

He also suggested that the target age of 67 be updated, given that life expectancy has risen since it was set more than two decades ago - a point also made by labour MP Zainal Sapari (Pasir Ris-Punggol GRC). Similarly, labour NMP K. Thanaletchimi highlighted the plight of older workers who lost their jobs before the law was changed.

For his part, Manpower Minister Lim Swee Say explained various sticking points that slowed down tripartite negotiations - between the Government, employers and unions - on the subject. He also reassured members that, compared with other countries, Singapore was not moving too slowly.

When the changes kick in this July, Singapore will actually move ahead of Japan, where the re-employment age remains 65, he said.

Perhaps the broader conclusion to draw is that there is never a good time for certain policy changes.

Even under ordinary conditions, legislative change can take a long time, especially if negotiations are required.

Urging caution during tough economic times is prudent. But on the flip side, what this means is that the drive to support older workers "can easily lose momentum", as labour MP Desmond Choo (Tampines GRC) observed.

Rather than putting off changes that the labour movement has long fought for, in this case, it is best to move forward while providing firms with help - as the Government is indeed doing.

Responding to calls from various MPs to provide incentives for employers to keep older workers, Mr Lim said the Government is "actively looking into this".

The nature of the help will be decided upon well ahead of the July 1 implementation date, he added.

Also, to keep legislation up to date and effective, it cannot be too early to anticipate future challenges. Even as yesterday's Bill - so long in the making - was about to be passed, Senior Minister of State in the Prime Minister's Office Heng Chee How was flagging future changes that could be made.

He noted that in future, firms will keep a small core of permanent staff and rely more on contract, outsourced or freelance labour. More workers will be self-employed or take on non-traditional forms of work.

Labour laws and arrangements must keep up with this growing "gig economy", said Mr Heng.

Given how long the changes to the law on re-employment have taken, it is surely not too soon to start looking at this new area of concern.

Improving re-employment opportunities for older workers
Changes to re-employment from 1 July 2017
Retirement and Re-employment (Amendment) Bill 2016 Second Reading Speech at Parliament by Mr Lim Swee Say, Minister for Manpower

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