Companies concern with higher medical insurance fees for keeping older workers around longer

At the recent National Day Rally on 18 Aug, Prime Minister Lee Hsien Loong announced that the statutory retirement age in Singapore will be increased from 62 to 65 by 2030. In addition, the re-employment age will also be increased from 67 to 70.

This increase will be done gradually, starting in 2022 where the retirement age will increase to 63 and the re-employment age will increase to 68.

In the case of retirement age, it means that an employee can work till that stipulated age if the worker wants to and that the company cannot ask the worker to retire before that age.

However, there is nothing to stop the company from retrenching the person way before the person’s retirement age, in the name of “downsizing”. Also, generally speaking, most PMETs who are retrenched will not get severance pay, since they are generally not unionized and do not come under the Trade Unions Act. Many also choose to resign instead of receiving the retrenchment letter so as not to “jeopardise” their future employment possibility.

Worse still, some Singaporean PMETs may be retrenched in the name of “downsizing” and later find that their position has been filled by a foreigner instead. This was disclosed by then Manpower Minister Tan Chuan Jin in Parliament in 2013:

We have also heard of situations where Singaporeans were retrenched or made to resign in the name of down-sizing, only to realise later that their positions were given to foreigners, who were coincidentally from the same countries as the business heads.

Let me be quite blunt. Would these practices not sound discriminatory? Would any respectable progressive company endorse these practices? If this hiring is indeed because they care only about choosing familiar candidates and not about hiring the “best man for the job”, then such practices have no place in Singapore’s workplaces.

Discrimination will not and cannot be tolerated. Stating the principle however does not mean it is easy to implement. I think we all recognise that proving discrimination is sometimes difficult. It is not always possible to discern whether such hiring practices are legitimately based on the objective requirements of the job or motivated by personal connections. We all know how “guanxi” works. I know that Singaporeans perceive some outcomes to be against the principles of meritocracy and fairness, and I fully understand why we feel angry in the process.

Also the company could offer less than favorable work scope and condition, with much lower pay at one’s retirement age which essentially compels one to resign eventually.

In any case, some companies are concerned with the higher medical insurance premiums they have to pay for keeping the older workers around longer in response to PM Lee’s announcement.

A Managing Director of a security firm, Mr Ponno Kalastree, pointed out that with older workers in employment longer, the medical costs which companies have to bear for them would go up as well, including paying for insurance coverage and continuing to keep them in employment even when they are not able to work regularly due to prolonged ill-health.

He hopes that the Government would be able to provide a grant that goes towards the medical benefits for older workers which could help “ease the burden (of employers) paying for them”.