THE Government has opted to give time to companies to re-employ workers to age 67 because forcing them to do so immediately may end up backfiring, said Manpower Minister Tan Chuan-Jin.
That is why changes in the law to raise the re-employment age to 67 will kick in only two to three years from now.
Currently, firms are required by the law to offer re-employment to eligible workers when they turn 62, up to the age of 65.
Mr Tan said not giving firms sufficient time to adapt may result in making older workers less employable.
"(Some) companies will feel that, well, if that's the case then I'd rather not take on someone at this age because, you know, these few years I will be tied down in a way where I'm not able to adjust," he added.
The minister made these comments in an interview to sum up the progress of the Ministry of Manpower (MOM) this year and outline its plans going forward.
The Government has taken a gradual approach of raising the re-employment age to 67 - a goal which it first set in 1993.
But it was not until 2012 that the new Retirement and Re-employment Act allowed senior workers to be re-employed to the age of 65.
In the meantime, MOM wants to get firms ready for the change in legislation by encouraging them to voluntarily rehire older workers.
To achieve this goal, the ministry announced in September that it will offer firms incentives to voluntarily rehire older workers above the age of 65.
Mr Tan declined to give details of the incentives but said that they will be announced next year and backdated to Jan 1 next year.
"We believe that by actually setting the conditions in the next few years and then for the actual Retirement and Re-Employment Act to kick in to 67 a few years later, would on balance be the best approach," said the minister.
Business groups and economists said that not all firms are convinced yet that the benefits of hiring older workers will outweigh the costs, and that incentives will help push the cause for older workers.
"Subsidies for re-designing jobs, investing in automation and training and co-sharing of medical insurance and salaries of older workers above the age of 62 will help firms a lot to bring down the cost of re-employing older workers," said the Singapore Business Federation's chief operating officer, Mr Victor Tay.
Singapore Management University economist Hoon Hian Teck said that some firms are reluctant to re-employ older workers above 65 as the productivity of the workers may not match their salary expectations.
"The Government can step in to subsidise part of the wage cost during this transition phase before legislation kicks in," said Professor Hoon.
Source: The Straits Times © Singapore Press Holdings Limited. Reproduced with permission.
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