Adjustments help seniors stay employed
Home > ST Forum > OLDER WORKERS' WAGES
May 29, 2010
WE THANK Madam Ee Kit Heng ('CPF cuts based on age, which is not a reasonable factor', last Saturday) and Captain Rakesh Dir ('CPF cut a contradiction', Wednesday) for their views on the Central Provident Fund contribution rates for older employees.
While Singapore has seen the employment rate of older residents aged 55 to 64 rise from 43 per cent in 1999 to 57 per cent last year, it is still significantly lower than the overall employment rate of 76 per cent for all age groups. We have introduced various measures to improve the ability of older workers to stay employed.
In our labour market, wages still contain significant elements of seniority-based pay, where wages increase automatically with age regardless of workers' productivity and performance. This may result in older workers becoming less competitive. Some wage adjustment is, therefore, necessary in order to maintain the employability of workers as they age.
Singapore's approach is twofold. First, an adjustment through the CPF contribution rates for older workers, which applies to all firms across the board. Second, allowing employers to adjust the salaries of their workers as they reach age 60. However, employers should not do so automatically, but should take into account the ability and performance of their workers as well as other relevant factors.
In addition, since 2007, the Workfare Income Supplement has also helped to boost the annual income of older, low-income employees and make up for the lower CPF contribution rates.
The Ministry of Manpower will continue to work with the tripartite partners to enhance the employability of older employees, through training, skills upgrading and job redesign. This will reduce the element of seniority-based pay in wage structures, and hence reduce the extent of wage adjustments that older workers will face.
Farah Abdul Rahim (Ms)
Director, Corporate Communications
Ministry of Manpower
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