THE Government has accepted the recommendations of the Tripartite Committee on Employability of Older Workers to raise the age ceiling for the re-employment of older workers to 67 from 65. This will be done through promotional means supported by incentives.
The idea is to give companies more time to prepare for this before legislation kicks in. The legislation will be introduced at an “appropriate time”.
The PAP Seniors’ Group (PAP.SG) welcomes this move, which is a progressive step and will help to boost the employment prospects of our older workers.
The Government has moved to bolster the position of our seniors in health care and housing through its recent policy changes, and it makes great sense now to focus on employment. This is an important way of ensuring that our seniors remain independent and can continue to live with dignity. To be able to work for as long as they wish to and earn a steady stream of income is greatly empowering for our seniors.
Raising the rehiring age to 67 is not just good for the individual. It also makes great economic sense. It is projected that by 2030, there will be 900,000 people aged 65 years and above. If our total fertility rate remains at 1.2 and we have no immigration, there will be only 2.1 working age citizens for every citizen above the age of 65 in 2030. If we do not extend the productive working age of our older workers, our growth will be affected.
Companies, too, benefit, and much has been said about the value of older workers. In a survey conducted last year by the Tripartite Alliance for Fair Employment Practices, the majority of the companies which responded agreed that mature workers benefited them through lower turnover rates and reduced absenteeism.
While promotional means is a practical solution to give employers more time to adjust, I do hope that the Government will not take too long to legislate the extension.
I have no doubt that the unions will be able to push through the extension among unionised companies, but the worry will be the non-unionised companies, where this may not be a priority. To some extent, the proposed incentives may help and are a good move, as most employers have cited costs as a concern, but the question is whether this will provide enough push for companies to voluntarily raise the ceiling.
I also hope that incentives will not have the unintended consequence of devaluing the contribution of older workers, particularly for those who would be re-employed in any case because their services are needed.
Nevertheless, to really ensure that the incentives have an impact, the Government could consider introducing a sliding scale of benefits, whereby those who come on board earlier are given more incentives compared to those who respond later. In this way, hopefully, most companies would be encouraged to raise the rehiring age ceiling faster.
According to employers, they need more time to redesign jobs and work processes and to retrain older workers. I find this surprising as such measures should already have been put in place when the rehiring age ceiling was raised to 65. There cannot be that many major changes that have to be made for the working age to be increased by just an additional two years.
Also, employers’ concern about medical costs should, to a large extent, be addressed by MediShield Life that comes into effect next year, as a larger portion of hospitalisation charges will be covered. Hence, prudent employers may want to rationalise their own medical benefits scheme with MediShield Life, to address this concern.
The training of older workers is another major area in ensuring that their skills remain relevant and useful to companies’ needs. There are now already available training grants and programmes that companies can tap to prepare their older workers, so that lack of skills should not be an excuse. The tripartite partners could also do a lot more to highlight positive examples of enlightened companies that have voluntarily raised the rehiring ceiling, even without any incentives.
One example is Prima. A few years ago, I officiated at an event where the company gave out long service awards to its employees. There were employees who had served the company for more than 40 years and were in their 70s. It felt really good to see a company that values its workers so much.
In August last year, Prima signed a collective agreement with the Food, Drinks and Allied Workers’ Union to offer 65-year-old workers, with satisfactory performance and good health, employment contracts until age 68.
I urge more companies to emulate Prima’s example and waste no time in raising the rehiring age ceiling of their older workers. I am heartened, too, by the public sector’s positive response to the recommendation, as its hiring practices have a deep impact on the private sector.
Finally, we need to address the concerns of older workers who have lost their jobs and are trying to get back into the workforce, which the recommendation will not cover. Among their biggest hurdles in seeking employment are hiring practices that are still biased against them. Employers should be prepared to give them a chance, rather than turn them away just because of their age.
I would like to suggest that companies hiring unemployed older workers be given incentives too, and not only those who raise the rehiring age ceiling of existing workers. It would also be useful to conduct a study on the hiring practices of companies to ascertain whether this bias really exists or whether there are other valid factors involved that affect the hiring of older workers. In this way, more effective strategies could be developed to boost older workers’ chances of securing a job.
The tripartite partners have made a good move. The challenge now is to make sure that the recommendation works.
The writer is the Speaker of Parliament and chairman of the PAP Seniors’ Group.
stopinion@sph.com.sg
Australia’s ageing population presents a considerable challenge to Australia’s economy. After a generation of favourable demographics and a once-in-a-lifetime terms-of-trade boom, it will be old-fashioned hard work and Australian ingenuity that determines our economic future.
One of the least discussed causes of Australia’s economic success over the past half century has been our favourable demographics. Until recently, Australia had a relatively young population, flush with working age individuals and supported by rising labour force participation among women.
That period of unprecedented success is over and the labour market participation rate is now on the skids. That is set to continue over the next generation due to the retirement of the ‘baby boomers’ and relatively low fertility rates in Australia.
Reserve Bank of Australia assistant governor Chris Kent was in Adelaide today discussing some of the implications of an ageing population on Australia’s economy. Clearly this is an issue that is on the mind of the RBA’s top brass, and rightly so, with deputy governor Philip Lowe providing an excellent analysis back in March (Coming to terms with Australia’s stark economic reality, March 13).
The implications of this trend are vast and will fundamentally change the composition of Australia’s economy. The first concern is the number of workers, with the economy becoming increasingly reliant upon a smaller share of the population to drive growth and finance government services. The share of workers in health and aged care services is set to boom but the demand for teachers may ease.
More broadly domestic demand is expected to shift increasingly towards services. According to Kent, “services constitute a larger share of total consumption for older people than for the rest of the population.” The retail sector is set to be one of the biggest losers from Australia’s ageing (A new grey area for retailers, March 24).
Kent notes that “we can expect that ageing will lead to extra demand for services at the same time that it weighs on the supply of services.” That will inevitably push the price of services higher relative to goods. But we shouldn’t blame ageing entirely for this trend, productivity growth has been much higher in goods manufacturing than in services for a long time.
There are two other issues that warrant further discussion: government finances and risk-taking.
It’s widely accepted that an ageing population will narrow the tax base and weigh on tax revenues. At the same time it will increase the demand for government health and aged care services. The Productivity Commission estimates that an ageing population could increase aged care, aged pension and health care expenditures by around 7 percentage points of nominal GDP by 2059-60.
The aged pension will come under increasing pressure due to insufficient retirement savings. Superannuation has helped to some extent, but remains insufficient for many ‘baby boomers’. Unfortunately, the superannuation tax system largely favours the wealthy, offering tax concessions that accrue primarily to those who don’t need them.
Although as noted by RBA governor Glenn Stevens, there is also the risk that ‘baby boomers’ hold too much of their wealth in property and are particularly susceptible to a market correction (Have baby boomers made a big investment mistake? September 4).
Finally, Kent notes that older Australia’s have less tolerance for risk, “including those associated with new business ventures, developing new products and services, and pursuing innovation more generally.” None of that is a surprise but it suggests that an ageing population may create an impediment for productivity.
However, according to Kent an ageing population does provide some opportunities. But I’m not sure that longer working lives is what a lot of people have in mind when they think of opportunities.
Nevertheless, higher wages will encourage some older workers to either stay in the workforce or re-enter it. To some extent we are already seeing this process in action with the participation rate among older Australians increasing significantly over the past decade. That is a trend that should continue over the next generation.
Another important point is that a longer lifespan will necessitate a rise in national savings. That said, the performance of our superannuation industry — which charges exorbitant fees for subpar work — suggests that this may not be as beneficial as it first seems.
An ageing population presents a considerable challenge for the Australian economy. Innovation and productivity growth are the two keys to solving the riddle and they will ultimately determine our long-term standard of living.
The obvious issue though is that an ageing population tends to weigh on productivity and risk-taking. It also encourages greater consumption of services — a sector where productivity growth has historically been relatively low.
Nevertheless, we will have to boost investment and productivity growth if we hope to maintain our recent economic gains.
Source: Business Spectator