Tan Kin Lian / Columnist
Prime Minister Lee Hsien Loong spoke at the Reinventing Retirement Asia Conference organised by the Council of The Third Age. He urged “no let up in keeping seniors at work”. He said that outmoded social attitudes and systems have to change, and that seniors should continue to work beyond the customary retirement age.
Older people should continue to work, if they are productive and useful. But we have to recognise that they are less energetic, slower and more likely to fall sick. They cannot be expected to work as productively as younger people.
Older people should be allowed to work at a slower pace and part time, and to earn a proportionate wage. If their wages match productivity, it is likely that employers will continue to engage the older workers – as they bring the benefit of experience, lower training cost and greater stability in the workforce.
But, the older workers should not be exploited. They should be entitled to a fair wage for the work that they put in. Left to fend on their own, the seniors will be exploited by the market. If employers can get people to work at lower cost due to their desperate situation, the wages of seniors will stagnate or drop.
The trade union movement can, and should, take a stronger stand to get a fair deal for the older workers. Most of these workers were formerly the members of the trade union. There is little that the movement can do if it continues to believe that wages should be left to market forces.
Individual workers will continue to be weak. That is why they need a trade union to help them get fair wages through collective bargaining. There is a role for the trade union movement to play a more active role.
Saving for retirement
A better protection for the older workers is financial independence. During their working life, they should set aside sufficient savings to meet their financial needs during retirement.
If they have sufficient savings at the customary retirement age, they are financially independent. They do not have to work if they do not get satisfactory working conditions and wages. These people can continue to work for pleasure, to keep active, and to benefit society. A supplementary income is a bonus.
Unfortunately, many of our older workers are not financially independent. They are not able to save sufficiently or to invest their savings wisely during their working life.
The wages of our lower income workers are inadequate and had stagnated during the past decade. This is due to the absence of a minimum wage policy, a pro-business environment and reliance on market forces. It has led to a widening of the income gap. The fruits of economic growth are not fairly shared among the population, leaving people at the lower income groups in a worse position.
The cost of living increased significantly during the past decade. Although the official statistics calculated inflation at a modest level of 2 percent for most years, the actual inflation rate felt by most people were much higher, as they see it daily in the consumer prices, taxes and levies. The inflation rate escalated to 7 percent in 2008.
High cost of living and inadequate wages result in less money available to be set aside as savings for the future. Many people reduce their savings due to this squeeze.
Poor return on savings
The return on savings has been poor. For risk-adverse savers, the interest rate on bank deposits dropped to below 1%, which was grossly inadequate to cover the actual inflation rate.
Those who invested in life insurance and structured financial products received a poor return relative to the risk. The financial institutions were able to take away a large margin on these products to earn a big profit. In good years, these products gave a modest return to the investors. In bad years, the investors suffered the full impact of the losses. The investors have also been exploited by the market.
During the global financial crisis, more than 10,000 risk adverse investors had their hard earned or life savings completely wiped out on their investments in the credit linked notes, which were marketed to them as safe investment products. These investors were not risk takers, as they were not given a high return on these notes. To earn a modest return of 5%, they had to lock up their savings for 5 years.
It is a bad mark on Singapore’s success story that so many seniors do not have sufficient financial security, in spite of a lifetime of hard work and prudent savings.
This is directly attributed to the economic strategy of reliance on the free market and inadequate protection for workers and consumers.
It is quite sad that many seniors have to work to earn a low income just to survive. They have to work hard and long hours, in spite of their weakened health. Apart from the low wages, they have to suffer indignity as well.
The Prime Minister quoted the example of hotels favouring older women attendants to clean rooms. But they tend to drop out due to pressure from their children. “This is a delicate matter of face and status,” the PM said.
There is no need for people to suffer indignity, if they receive fair wages. If the room cleaners are given adequate wages, they will have greater dignity and will even receive the encouragement of their children!
In some countries, refuse collectors earn more than office workers. If this situation applies in Singapore, there will be no shortage of locals wanting to work as refuse collectors.
Positive Government policies
It is time to review this failed strategy – which has resulted in many seniors facing the financial insecurity of retirement.
We need positive Government policies to make a change to improve the lives of the working people. They need to have fair wages and a fair return on their savings.
We need stronger regulations, trade unions and consumer associations to safeguard the interests of workers and consumers in the free market environment.
Tan Kin Lian