Employers urged to adopt fair wage system for older workers
By Saifulbahri Ismail/Asha Popatlal, Channel NewsAsia
SINGAPORE : Manpower Minister Gan Kim Yong has urged companies to adopt a fair and equitable stance in dealing with workers' wages when they turn 60.
Mr Gan said employers should not simply reduce salaries by the maximum 10 per cent permitted by the law.
The practice of a pay cut of up to 10 per cent for older workers started some 10 years ago.
Then, it was meant to alleviate the costs associated with a seniority-based wage system, and help ease the burden on companies as the retirement age was raised progressively from 60 to the prevailing 62.
Recently, the labour movement said it wants to end this practice.
Speaking to reporters at a community event on Saturday, Mr Gan called on companies to consider installing a more flexible-based wage system.
He said: "They really should take into account whether the seniority wage system still exists in the company. They should also take into account reasonable factors such as the type of jobs that they are doing, the productivity of the workers and the performance of the workers."
The Manpower Minister also responded to feedback given by older workers who have raised concerns about the cut in employers' Central Provident Fund (CPF) contribution rate.
Upon turning 50, this is reduced from 14.5 per cent to 10.5 per cent. Those aged 60 receive 5 per cent, or a two-third reduction from the top rate.
Mr Gan explained this is necessary to enhance the employability of older workers.
He said: "If we were to raise the CPF now or restore the CPF for the older workers, it may adversely affect the employability of the older workers and affect the competitiveness of the company and eventually, it will not be to the advantage of our older workers."
The Manpower Ministry said the employment rate of older workers aged 55 to 64 has improved, up from 45 per cent in 2003 to 57 per cent at end-2008.
- CNA/ms
- wong chee tat :)
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