Turning Singapore's ageing population into an edge

How can Singapore transform the reality of an ageing population into a competitive advantage?

Within ten years the numbers of Singaporeans reaching the current retirement age of 62 each year will be twice what it is today - a consequence of the baby boom that occurred between 1955 and 64 and a lengthening average life span – from 61 in 1957 to 80 today.

In the lead up to Re-employment Act to be passed shortly, Government agencies are encouraging employers to adopt a more age-centric attitude to reemploying older workers.

According to Mr Lim Swee Say, Secretary General of NTUC, Singapore must transform the reality of an ageing population into a competitive advantage. This means redesigning jobs and revamping salary structures to pay according to performance rather than according to seniority. In 2006 53.6% of companies had started rehiring retirees. According to Lim Swee Say, provided we start now, policies will be easier to implement when the legislation comes into force in five years time.

Fiscal changes recently announced such as Workfare and adjustments to the CPF will help bolster retirement savings. Another option could be tax rebates for companies that employ older workers, The key issue however is to allow older people to remain in employment for longer. Consider that today 6.4% of Americans are working beyond the age of 75. According to Professor Olivia Mitchell of SMU, delaying retirement by just three years to the age of 65, actually halved the retirement savings shortfall of American workers.

One concern is that many smaller companies will not have enough jobs to reemploy older workers. Yet we need to review this against the backdrop of employment data. Last year 176,000 new jobs were created and in the first six months of this year, 111,300 jobs were added. NTUC predict the creation of up to 500,000 new jobs over the next five years. About half of these will match the traditional skills profile of older workers. At the same time, some employers have started finding alternative employment for retirees with other companies. Also and according to SNEF executive director, Koh Juan Kiat, specialist advice and help is on hand for smaller companies that don’t have an internal HR section.

Another concern is that the Reemployment Act will no go far enough when it comes to protecting older workers. There are fears that older workers will be rehired at a lower rate or be discriminated against in other ways. This has proved to have been a feature of the legislation in Japan where traditional cultural norms such as a respect for seniority and gratitude for loyalty have made up for the shortcomings of the legislation. These cultural norms are not a feature of Singapore and unlike many western societies we don’t have antidiscrimination legislation that is designed to protect employees against ageism.

NTUC have emphasized the need to take a case by case approach to the reemployment of older workers rather than relying on legislative provisions. Of 209 unionized companies the majority are offering the same job but at a different rate of pay – with reduction of between 10 – 20%.. This compares favorably with what they would be likely to receive were they to seek employment elsewhere.

Many older workers have indicated that they don’t mind working beyond 62 but they want a more flexible schedule. Employers must be prepared to look beyond a 9 – 5 job. At the same time older workers much be prepared to change gear – and allow younger workers to progress up the corporate ladder.

According to sociologist Angelique Chan, the demographic watershed is likely to inextricably change the structure of Singaporean society. Consider also that the family unit has been shrinking in size; partly the result of a rising population of singles and childless couples, higher divorce rates and migration. One of the consequences of this is that older Singaporeans will not be able to rely upon extended family networks to provide them with economic and social support as they have done in the past.

Of particular concern is the numbers of ageing women. Men generally predecease their wives and women can be widowed for several years. Many will have paid significantly less CPF contributions that their male counterparts as a result of family commitments. They are also likely to have less qualifications and skills and less earning power.

Perhaps most of all, the need to respond to demographic changes has caused us to reflect on a more important issue; how can we as a society best utilize the potential contribution that older workers can make? The real issue isn’t ageing, it’s to do with developing flexibility, talent retention and the utilization of expertise. By retaining rigid demarcation boundaries between the working population and the ‘retired’ population we are applying an ‘old economy’ perspective to new economy economic thinking.By stereotyping ‘older workers’ we are, in effect, stereotyping patterns of economic activity. The assumption that a employee’s working life should finish once they reach the age of 63 undermines the whole concept of the 21st Century economy which is based upon the principles of a seamless and boundaryless global economy which is facilitated by levels of expertise and devoid of artificial constraints such as those imposed by a mandatory age of retirement.

Paul FitzPatrick is a Singaporean PR, author of three books and a free lance journalist with News International. conceptsasia@yahoo.com