Don’t raise statutory retirement age, says MEF

KUALA LUMPUR: Malaysia should adopt a re-employment policy for those aged 60 and above, which will help keep senior citizens in employment beyond the retirement age.

Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan said this would allow the country to have a million more experienced workers, which can spur economic growth.

He said such a policy, as implemented in Singapore, was the preferred option for senior employees to remain in employment as opposed to further raising the statutory retirement age in the country, which could impact the labour market.

“Malaysia can try harnessing human resources from those in the senior age group. Although they may not be physically strong as before, they are experienced.

“The policy could allow their re-employment until the age of 65, which if put into practice, would see an additional one million human resources in the country,” he told the New Straits Times.

In Singapore, Manpower Minister Josephine Teo had on March 3 said raising the statutory retirement age to 63 and the re-employment age to 68 would proceed as planned on July 1.

This, Teo said, would keep Singapore on track to raising the retirement age to 65 and re-employment age to 70 by the end of this decade.

Shamsuddin said implementing a blanket increase on the retirement age to 65 or beyond could impact the labour market and cause unemployment among the younger generation to increase.

In July 2013, he said the government had increased the retirement age to 60 from 55, which led to the loss of about a million job opportunities for graduates.

“Following the increase in retirement age, people who should have retired were kept in employment for another five years.

“This became a problem for employers trying to absorb school-leavers to fill up posts that should have been left vacant by the retirees. The private sector would have about 200,000 retirees per year, hence in five years, about a million of them were retained up to July 2018.

“The impact on the labour market was severe and hampered the ability of employers to create more jobs.”

Given that the unemployment rate had increased amid the pandemic and economic uncertainties, he said, it was not the right time for Malaysia to implement a blanket increase in the statutory retirement age.

“I’m not saying we shouldn’t allow older people to be employed. They should be encouraged to remain in employment, but this should depend on their performance and health status, such as whether they have any disability issue.

“Rehiring them (those deemed fit to contribute to the companies) on a contractual basis is a more efficient method than enforcing a general blanket increase in retirement age.”

Shamsuddin added that Bank Negara should look into insurance-related policies due to the high loading imposed on premiums.

In December, World Bank Group representative to Malaysia and country manager Firas Raad had said Malaysia needed to relook its retirement age policy because the nation was becoming an ageing society.

An ageing society is defined per the international convention as having seven per cent or more of the population aged 65 and above.

Firas said rapid ageing meant that Malaysians would have to work longer.

He said compared with other upper-middle and high-income countries, the employment rate of those aged 55 to 64 in Malaysia was low, especially among women.

By comparison, in South Korea, Japan and Thailand, more than 65 per cent of people aged 55 to 64 are active in the labour market.

In Malaysia, Firas said only 45 per cent of those in this age group were active in the labour market, adding that one policy option was to gradually increase the relatively low minimum retirement age from 60 to 65 and link it to life expectancy thereafter.

Meanwhile, Malaysian Trades Union Congress (MTUC) acting president Mohd Effendy Abdul Ghani said now was not the right time to raise the retirement age because it would hamper efforts to reinvigorate the labour market and economy.

Effendy, who is also MTUC deputy president, said the government could consider adopting a re-employment policy.

“The Covid-19 pandemic has led to a higher number of retrenchments. Many new graduates will enter the job market (soon). Increasing the retirement age will only make the already tight labour market even worse.

“We do not object to increasing the retirement age, but we feel the government should focus on creating more jobs for graduates, reducing the number of migrant workers and increasing the minimum wage.”

He called for a tripartite meeting between the government, employers and employee representatives to be held to address issues linked to wages, employ-ment and the job market.

Source: NST