The Online Citizen

Older workers to work for less. A want or a need?

Older workers to work for less. A want or a need?
May 03
12:01 2014

By SY Lee and Leong Sze Hian 

Less pay is okay, say older workers” (Straits Times, May 3) takes the top news of the day. It is said that 70% of the 50 seniors polled in the a survey, would want to work beyond 65 even if means a cut in their paycheck.

The current legislation, Retirement and Re-employment Act (RRA) which covers re-employment after the retirement age, states that healthy workers who hit the retirement age of 62 must be offered re-employment until 65, or a one-off payment.

The RRA would, however, not apply to certain categories of employees who have been exempted by the Minister for Manpower under the Act. The employer can also choose not to offer re-employment to the employee if the employee is assessed by his employer to not have satisfactory work performance or not medically fit to continue working. (See here)

It is stated in Ministry of Manpower (MOM)’s website that employees can seek help if they have any re-employment dispute:

  • By seeking the union’s advice and assistance (if the employee is a union member);
  • Notify the Commissioner for Labour (COL) in writing:
    1. No later than 1 month after the last day of employment if he is not offered re-employment and if he disputes the employer’s grounds for not offering re-employment including not meeting the re-employment eligibility criteria of satisfactory work performance and medically fitness, no suitable job vacancy or dismissal during re-employment; or
    2. No later than 6 months after the last day of employment if he feels that the terms and conditions of the re-employment offer and/ or the Employment Assistance Payment (EAP) amount offered is/ are unreasonable.

No records have been make public about the numbers of cases handled by MOM over such disputes. The Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) on the other hand has publicly announced that it received 1,055 complaints against employers over the last 3 years but only 12 cases heard within the same period of time.  (read more here)

The article also wrote, “40 per cent want to keep working because of financial commitments such as house loans and school-going children.”

So is the older workers workers willing to work for less? Or is it that they do not have a choice if they need to work into their later years?

The re-employment legislation is a joke?

When Roy Ngerng, Han Hui Hui and I went to Oslo last month to interview their Confederation of Trade Unions – what we encountered was disbelief and bewilderment from the unions that our re-employment legislation primarily allows the supervisor of the worker and the company to determine whether the worker is “healthy” enough to be offered re-employment.

Also, an employer can offer any terms – huge pay cut, longer work hours, heavier work load, etc – and if the employee does not accept – the employer would have fulfilled their obligations under the legislation.

If the employer does not want even to offer any terms – its just a one-time payment of $4,500 to $10,000.

In this connection, when most of our pilots were told recently that they would not be re-employed at age 62 – I wonder how much compensation they received – $10,000?

Another issue related to the re-employment act, may be that there is widespread age discrimination in regards to wages in Singapore.

MOM commissioned study?

A MOM commissioned study at a local university concluded that Singaporeans are expected to be more adequately prepared to retire than the average of the OECD countries.

Real wage growth declines with age?

According to the Retirement Study (“Retirement Study: High IRR?“, Nov 15), “In contrast to previous studies which assumed constant wage growth, we used data collected by the Ministry of Manpower (MOM) for the Labour Force Survey (LFS) over 2001 to 2011 to simulate real wage growth paths for individuals”.

“It is a hump-shaped distribution of earnings by age where wage growth is faster when the worker is young and tapers off into the negative as he gets older”.

empirical age earnings

Taken from “Adequacy of Singapore’s Central Provident Fund Payouts: Income Placement Rates of Entrant Workers

From the graph in the study, it appears that real earnings start to decline from around age 38, for males at the 50th percentile for earnings.

Our understanding is that at age 55, which is the age used to compute the Income Replacement Ratio (IRR), the real earnings would be about the same as that at around age 33.

So, does this mean that we are assuming that one would be earning at age 55, the real earnings equivalent of what one earned at around 33?

Is the above not statistical evidence that there is an existing age discrimination against older workers, since real wage growth declines with age, particularly for lower-wage occupations?

With the national newspapers giving an impression that older workers will gladly take a pay cut to keep their jobs, would the companies out there not take up the offer and suppress the already low wages for elderly workers in Singapore?

Uniquely Singapore!

  • donthc

    Pay should be based on the amount of work done, and one’s position and responsibility in the company. Not age.

    Sure, older people are less fit physically, however, how many people actually work in jobs which require one to exert 100% of his strength 100% of the time?

    Many workers are desk-bound, working in sedentary jobs which do not have much physical fitness requirement.
    Even for blue-collar labourers, how many 60 years old are still working at the frontline doing grunt work, e.g. bricklaying, assemblyline etc?

    If there’s a decline in the worker’s output, by all means cut their pay. If not, it is very unfair to cut the worker’s pay just because he passed the retirement age.

    • jessie

      The older worker also has a wealth of experience and can get work done at a more efficient level. He may not need as much physical output.

  • nelsonmandala

    asked the ole FART why he need to work till today? he is almost 90 ears ago
    beside gettin paid a monthly wages of almost $20,000 he has somethin to look forward to…
    ada older folks juz laze in the void deck glazin the sky or even count the nos of pigeon droppins juz to pass time awaitin for themselves to drop DEAD…
    do u all know that cardboard/recycle cans collection is also not easy hor…it liked a PROTECTION circuit..u simply cannot suka suka walked into a hawker centre/market juz to collect recycled materials

    • Ten Seth

      bro, is the old man even working? What are his responsibilities? And if he isn’t working or being “PRODUCTIVE” who dares to cut his pay? Our Loong? It’s all messed up since the day when positions were created within.. without asking for public opinion!

      • nelsonmandala

        beside the ole FART..the ada COUSIN who also get a grandtitle..die die still collect 20,000 monthly wages..this ppls so THICK skins leeched on the Treasuries liked its their own monopoly piggy bank

  • Arnold_Chong

    “Less pay is okay, say older workers”???

    In the latest Press Freedom Rankings by Freedom House, Singapore lies at 152th position.

    If I’m not mistaken, we have dropped a notch or 2 from the previous year.

    After reading the headline of the article in the main stream media regarding wages for older workers, how many Singaporeans are surprised that our rankings keep falling every year?

    Sadly, if we don’t see improvements in the quality of our main stream media, we could soon occupy bottom place with North Korea.

    That would surely be a setback in our attempts to entice foreign talents to sink their roots here.

    • albert

      Just reading all the rubbish from the ST today, one can see all the contradictions like tight labor market but employment rate inching up, or PM promising the people that he will help them have more salary raises. And now we have them saying older workers do not mind working for less. Who on earth did they ask and how many have they asked before coming to this conclusion. Based on the Press Freedom Rankings, being a developed country who boasted to be a global city, we have no freedom as far as media freedom.

      • Ten Seth

        If you asked them, they will give you figures.. statistics.. but not the whole story.. not the whole process.. the kind of people they interviewd, the group they targeted.. all this will not be revealed. In the end, who believes our MSM nowadays? I never buy them anymore. It’s a waste of my money to spend on a paper that does not DELIVER.

  • PikuChoo

    Less pay is only “okay” to the alternative of NO pay. I would think most seniors who are working are working because they NEED to, not because they want to pass the time or “mentor” the younger workers.

    Incidentally were the “Senior” Minister and “Mentor” Minister paid less than the other ministers when they were in the cabinet?

    • Ten Seth

      Agreed. If you HAVE to work, then you HAVE to accept what the employers give.. and if employers give LOWER pay, what choice do you have?

      Singapore senoirs and the elderly are not dumb, if they are in a niche segment of the economy, where their experience is worth every cent they ask for, do you think they will go for less? Look at the CEOs and board of directors at MNCs and other companies, most are 60 and above.. ask THEM if they would want LESS pay.

      • nelsonmandala

        many retired OC of polis force unit forced to step down b4 60..many either endup as texi driver or chief security officer in the private sectors( they dont even hav chance to work for aetos/cisco as consultans)

  • asteroid

    If Kuan Yew can get full pay at 90 — even though he’s not doing his job,

    why should much younger people, such as those in their 50s, 60s and

    70s, take a pay cut when they are doing real work?!? It’s quite illogical.