Government Reviewing CPF Policies for Older Workers: Tharman

  The Straits Times

October 3, 2011

Singapore

THE Government is reviewing its policies on Central Provident Fund (CPF) contribution rates, especially where older workers are concerned.

Deputy Prime Minister Tharman Shanmugaratnam said the Government is also consulting unionists and employers to see how the review can be carried out.

Unionists have been pushing for a review of the current practice under which employer CPF contribution rates are cut when a worker reaches the age of 50, and again at 55 and 60.

Employee contribution rates are cut at age 50, 55, 60 and 65.

While giving no further details, Mr Tharman says he sees 'some merit' in the unionists' position because more companies are doing away with the seniority-based wage system, which makes older workers more expensive than younger workers doing the same job.

Now that companies are moving towards a pay-for-performance system, 'we have to make sure that the older workers are not disadvantaged in the job market', he said.

Mr Tharman, who holds portfolios in Finance and Manpower and is the minister coordinating economic and social policy, was speaking during an interview with Chinese daily Lianhe Zaobao that was published yesterday.

The practice of cutting CPF contribution rates for older workers to make them more employable was started in 1988 in the wake of a major recession.

In recent months, unionists have argued that the time is ripe to review the practice, saying that there is a need to boost retirement savings because people are living longer and facing higher housing and medical costs.

However, employers have been reluctant to support an increase in their CPF contribution rates because of the uncertain global outlook.

They also say they have to deal with the financial impact of a law due to kick in next year that requires them to offer re-employment to workers who reach 62.

In the interview, Mr Tharman stressed the importance of reshaping society's attitudes towards older workers.

He cited Germany and Japan as examples of places where there are positive and supportive attitudes towards the working elderly.

Germans used to think the elderly were physically weak and mentally incapable of working. Now, after an intensive government effort over the past six to seven years, polls are finding that more people feel the elderly are valuable in the workplace because of their experience, which makes them less prone to making mistakes.

At Tokyo's Narita Airport, Mr Tharman has seen the elderly taking on various tasks such as directing passengers.

'You have elderly people performing their jobs with grace. They take pride in it, and take great pride even in humble jobs,' he said.

Thus, he said, Singapore can do more even as it introduces re-employment legislation.

'It's the attitudinal shift that is really critical... on the part of the employers as well as the families and society at large,' he said.

Nevertheless, he said, Singapore must make it attractive for older employees to work by paying them well, and by offering a conducive work environment that makes them feel valued and respected no matter what job they do.

'We have some ways to go as a society in this regard. And we are doing it not just because of economic reasons, not just because we need more manpower in different industries.

'It's a social objective, allowing people to have dignity through work and to stay active,' he said.