As firms adapt to new guidelines, employees must reskill earlier to work longer

IT'S a known fact that Singaporeans are living much longer these days, with the country's life expectancy at birth currently the longest in the world at 84.8 years - even greater than that of Japan.

As such, it's not surprising that many people here want to stay employed longer too. The reasons are plentiful, with seniors eager to remain active well into their silver years and build a larger nest egg for their retirement.

On Sunday, Prime Minister Lee Hsien Loong announced at the National Day Rally that the retirement age will be raised from 62 to 63 in 2022, and reach 65 by the year 2030. The re-employment age will also go up in tandem - from 67 to 68 in 2022, before reaching 70 by 2030.

And in a huge boost for workers, the CPF contribution rates for those above 55 will be increased from 2021 onwards. The entire process to do this will take about 10 years or so depending on the overall economic conditions.

Once complete, it will mean all workers aged 60 and below will enjoy the full CPF rates, which stand at 37 per cent today. The CPF rates will only begin to taper down after 60, and level off after 70.

With Singapore's economic growth slowing this year and many companies - especially small and medium-sized enterprises - struggling with increasing costs and an uncertain outlook, employers can at least breathe a little easier knowing that the new rules don't take effect so soon.

And even when they are eventually implemented, they will be rolled out in several phases that are spread out over nearly a decade. This is significant, as it gives companies, especially the smaller establishments, sufficient time to prepare for the changes.

Financial help

Companies here also have the assurance that they won't have to shoulder the extra costs of keeping older workers on their payrolls all by themselves.

Mr Lee revealed that Deputy Prime Minister and Finance Minister Heng Swee Keat will, at next year's Budget statement in parliament, announce a new support package to help companies adjust to the changes in the retirement age, re-employment age and CPF contribution rates.

This package should include adequate financial measures to reach out to those who need it most, especially firms that typically hire a larger proportion of older workers in sectors such as cleaning, private security, food & beverage, and retail.

Ahead of the legislation kicking in, there is time to get greater buy-in from employers that these changes are necessary given Singapore's ageing workforce.

As things stand, companies in the services sector are bracing for the reduction of the foreign worker quota from 40 per cent today to 35 per cent in 2021, a move that leaves them with little alternative but to think of ways to improve productivity and hire more locals, including older workers.

Understandably, there are some employers who are still resistant to the government's move to raise the retirement and re-employment ages as these inevitably put a heavier strain on business costs such as wages, insurance and medical leave.

On its part, Mr Lee said the Public Service - the largest employer in Singapore - is taking the lead to raise the two ages a year earlier in 2021, and he made the call to private sector firms that are ready to come on board earlier as well.

Being able to work longer is one thing, but there is plenty of scope for more employers to follow the example of DBS and Mencast Marine - two firms hailed by Mr Lee in his Rally speech - and invest in the retraining and upgrading of their staff.

Labour chief Ng Chee Meng also said in a recent radio interview that over 50 companies here - among them Gardens by the Bay and ComfortDelGro - have voluntarily raised the retirement or re-employment ages of their staff beyond the existing statutory requirements.

The hope is that more firms can see the benefits of investing in their older workers to enable them to stay employable well into their 60s and even beyond.

All hands on deck

There is only so much that the government and employers can do. Workers, too, must realise the need to reskill themselves - not when they are nearing their 60s, but much earlier when they are in their 40s and 50s.

With new skills, an open mind and a desire to work hard and in different roles, more companies will inevitably regard these mature and experienced workers as integral members of Singapore's talent pool.

With an uncertain economic outlook, the road to 2030 will not be an easy one to navigate, for sure. The government's decision to carry out these major changes to the retirement and re-employment ages and CPF rates in gradual steps, instead of taking this medicine all at one go, is the correct one.