The recent changes in retirement and re-employment ages as well as the increase in CPF contribution rates for older workers creates cost pressures for business. Trade and Industry Minister Chan Chun Sing was reported by Straits Times as saying that the government is aware of these pressures, adding that the changes will be implemented over a 10 year period, taking into account business conditions along the way.
The Minister was speaking on the sidelines during a visit to wholesale distributor Hai Sia Seafood, a local SME.
On his Facebook page following the visit, Mr Chan said that government, businesses, and unions all have a role to play in ensuring that Singapore’s workforce remains competitive and adaptable.
Raising the retirement and re-employment age, he said, will benefit businesses as it allows them to tap into a large, experienced pool of workers.
During his National Day Rally 2019 speech, Prime Minister Lee Hsien Loong announced some findings of the Tripartite Workgroup on Older Workers including a gradual raise in retirement age from 62 to 63 by 2022 and to 65 by 2030, raising the reemployment ages to 68 by 2022 and 70 by 2030, as well as a gradual increase of CPF employer and employer contributions rates for older workers aged 55 to 70 starting in 2021.
ST quoted Mr Chan as saying, “We are of course very cognisant of the business cost pressures… but we think that it is the correct thing to do, to ensure that our workers have sufficient retirement savings.”
“By lengthening careers, it also allows people who live longer the chance to contribute meaningfully to society and that is, I think, beyond money,” added the minister.
When queried, Mr Chan said more details on initiatives to help smaller companies deal with the financial pressures will be announced closer to next year’s Budget.
He did also caution that reducing costs alone would not be enough, saying that businesses will also have to increase their revenue and develop a market beyond Singapore to avoid being ‘held ransom’ by any one market.
When asked about feedback to the announcements of the changes to retirement and reemployment ages, Mr Chan said that the discussion on issues relating to older workers has been ongoing.
He elaborated that the tripartite partners shared similar concerns about how to ensure retirement adequacy and give people the opportunity for meaningful careers over a longer time.
He said, “So, the question is not where we want to go…The question is, how do we make this transition?” he added. “If we make it too sharp too fast, it is difficult for the business to adjust, especially in a challenging external economic environment.”
“If we make it too slow, we will deprive many cohorts of older workers the chance to stay meaningfully employed,” he said.
The current plan strikes a good balance, he added: “We are confident that if we work closely together, we will be able to mitigate these challenges.”
On his Facebook post, Mr Chan held up Hai Sia seafood as an example of a company making significant efforts to invest in employees, undertaking job redesign efforts that cater to older workers.
He added that employees also have to pitch in for this to work.
He said, “Workers also play an important role as they will have to be willing to undergo training and reskill. In fact, workers should think about training early, as their careers will likely be long and span several roles.”
In an earlier Facebook post sharing the Public Service Divisions measures to help older workers prepare for a longer career, Mr Chan said that everyone, regardless of age, should start planning for a 40-50 year career.
“We should also continue to adapt, reskill and be open to new jobs, so we can remain current and employable,” he said.