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By Lien Hoang
The government of Singapore wants its people not just to live long, but also to prosper a little longer, as it prepares to tack on two more years to the reemployment age.
In an island nation where sexagenarians are seen working at places from McDonald's to hawker stalls, the government will require companies to offer their employees some form of work until age 67 rather than the current 65. Effective July 1, the updated law marks one way in which Singapore is trying to manage a graying population without providing social security through the government.
The government will promote reemployment by extending two forms of Special Employment Credit until the end of 2019, finance minister Heng Swee Keat said Feb. 20. That will save businesses as much as 11 percent of the cost of hiring seniors, Heng said in his annual budget speech.
While it's the richest state in Southeast Asia, Singapore has seen the number of layoffs rise every year since 2010, and the outlook is “not good” for the elderly in particular, says economist Walter Theseira.
“Employees who are at reemployment age may find it difficult to find a comparable job outside of their current employer,” Theseira, a former adviser to several state agencies, told Bloomberg BNA. “There is a vibrant labor market for older workers, but many of the jobs available are in low-paying, semi-manual work, such as attendants, sales personnel, security staff, etc.”
Under the revised 2012 Retirement and Reemployment Act, Singaporean citizens and permanent residents are entitled to work into old age, but with modified conditions. Businesses have the option of offering employees a different job, transferring the reemployment duties to another company willing to take the employees or making an Employment Assistance Payment worth three months' salary.
Unlike most developed countries, Singapore doesn't use public finances to fund retirement. The idea is to keep taxes among the lowest in the world and place pension responsibility on the family. Prime Minister Lee Hsien Loong reflected as much in his 2005 budget speech, saying, “The state will provide a safety net, but it should be a last resort, not a first resort, and should focus on the minority who need help the most. We thus avoid state welfare.”
Instead, retirees live off the Central Provident Fund, composed of contributions they and their employers made throughout their working lives.
When asked if the higher reemployment age would put pressure on Singaporeans to work longer or give employers more leverage, Theseira said: “I don't think enough research has been done on whether employers use this latitude to exploit workers offered reemployment contracts.”
Singapore's working population has been on a steady decline since 1970, when there were 13.5 people aged 20-64 for every person over 65. Last year, that figure was 5.4.
In the same period, fertility dropped to 1.2 children per woman, from 3.07.
Annie Koh, finance professor at Singapore Management University, said the city-state of 5.6 million has to consider these demographics when shaping reemployment policy.
“It's a great policy and when folks work till 67, it's not just because they worry about not having funds to retire,” she told Bloomberg BNA, adding that workers are happy to stay occupied in a reduced role. “So we encourage a later retirement age for helping our older population stay healthy and engaged.”
To contact the reporter on this story: Lien Hoang in Ho Chi Minh City at firstname.lastname@example.org
To contact the editor responsible for this story: Rick Vollmar at email@example.com
For more information on Singaporean HR law and regulation, see the Singapore primer.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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