Limited tax liability, challenges beyond funds could constrain senior work recommendations: observers

[SINGAPORE] Tripartite recommendations for senior employment released on Monday (Oct 26) tackle considerations for a range of workers and employees, but may still face stumbling blocks – such as limited scopes or unintended consequences – that could restrict their effectiveness, watchers told The Business Times.

The government has approved the six recommendations, which include raising retirement and re-employment ages ahead of schedule, support to create flexi-load jobs, wage credits and tax breaks.

“The package rightly combines legal protection with flexibility and incentives,” said Kim Seonghoon, associate professor of economics at Singapore Management University. He is also deputy director for the university’s Centre for Research on Successful Ageing.

Meanwhile, Chia Ngee Choon, associate professor of economics at the National University of Singapore, acknowledged that the recommendations included both employer-focused and worker-centric measures, with proposals in the latter group also targeting different sub-groups.

But they may have their constraints too.

Lesser income to tax

Prof Chia said the proposed enhancement of Earned Income Relief (EIR) for older workers, in particular, could be limited in encouraging career longevity.

The EIR amount is calculated based on a worker’s age and taxable earned income. By enhancing EIR, the work group aims to reduce seniors’ tax burden and increase their take-home pay.

But Prof Chia flagged that, empirically, earnings decline substantially with age, and the proportion of older workers earning at least S$5,000 per month also declines sharply with age.

Based on their personal income tax liabilities, many lower-income older workers would derive little or no benefit, and middle-income older workers would see only modest additional tax savings, she said.

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Higher-income older workers could receive larger tax savings – but be less financially dependent on these incentives when making employment decisions.

“From an economic perspective, the impact of enhanced EIR on labour supply is therefore likely to be limited at both the extensive margin (whether older individuals continue working) and the intensive margin (how many hours they choose to work),” she summed up.

Instead, Prof Chia proposed that a more direct financial incentive could be considered.

An employment continuation credit, structured as a direct income transfer similar to the Workfare Income Supplement, could reward older workers who remain economically active beyond the statutory retirement or re-employment ages, she said. It would benefit workers regardless of whether they have positive income tax liabilities.

“The credit could be designed to provide stronger incentives for middle-income older workers, with benefits calibrated according to earnings and possibly hours worked,” she suggested, noting this would not only be more inclusive, but better target those whose employment decisions may be more responsive to additional income.

“However, such a scheme would entail fiscal costs and needs to be weighed against other measures to support employment and re-employment of older workers,” she recognised.

Measures that address job redesign, workplace flexibility, skills upgrading and the employability of older workers “would address structural barriers to career longevity rather than relying primarily on financial rewards”, she said.

More fractional work

Several observers highlighted the Flexi-Load Programme in particular, which will be available to employees aged 50 and above, and funds employers to help them defray the transitional costs of developing and implementing flexi-load arrangements.

MOM survey data found that labour force participation among Singapore residents begins to decline more sharply from their late 50s.

The tripartite workgroup’s report said that in 2025, the most common reasons for being outside the labour force among those aged 50 to 59 were housework or caregiving (52.6 per cent) and poor health, old age or disability (16 per cent).

This suggests that more can be done to enhance access to flexible work arrangements as well as targeted career planning and upskilling opportunities to allow those who wish to continue working to do so, it added.

Prof Kim said: “Fixed costs per worker, such as administration, can make reduced-load roles harder to offer.”

Associate Professor of Economics at Singapore University of Social Sciences Walter Theseira pointed out that the programme is particularly relevant considering the changing profile of senior workers.

While flexi-work is already available for seniors today, these are usually lower-wage roles, he said, naming clerks working two-hour shifts at bakeries as an example. But such roles will not fit the skills and expectations of the more educated, higher-skilled workers transitioning into the senior worker group.

Meanwhile, many jobs, especially higher value-added jobs, have been “somewhat resistant” to fractionalisation, Prof Theseira said, which he thinks could be because the work done in many such jobs could be difficult to convert.

Emerging technologies will also become important, in helping to retain knowledge and workflows and bridging the gaps when work needs to be handed off due to flexible work, he added.

The professor believes that while companies could benefit from hiring consultants to help them reorganise work processes, solving this goes beyond what financial support can provide.

Having models and case studies will be important, he said, highlighting existing tripartite pilot programmes working with companies to create such roles.

Relatedly, Prof Theseira suggested studying how current employment regulations and frameworks cater to flexible work arrangements, with questions arising around topics such as employers’ obligations to workers.

Beyond the programme, the tripartite workgroup’s other recommendations are largely calibrations of existing moves that “remain good to do”, Prof Theseira said.

Bang for buck?

For Prof Kim, the Re-Employment Credit – which will replace the Senior Employment Credit in providing wage support for employers in hiring and retaining workers beyond statutory age limits, and have a higher wage ceiling – stands out the most.

“An employment subsidy adds jobs only if it changes hiring, retention or work decisions,” he said.

Prof Kim suggested that the manpower ministry use “a credible comparison group to estimate the additional employment the credit creates or preserves”.

“It should also track hours, earnings, costs and whether subsidised hires displace other workers,” he said.

The professor also flagged re-entry after job loss as a continued challenge that still needs to be addressed. For retrenched residents aged 50 to 59, the six-month re-entry rate was 41.9 per cent in the manpower ministry’s Q2 2026 labour report, he said.

“The planned review of the SkillsFuture Jobseeker Support Scheme is a chance to test wage insurance, which temporarily replaces part of the earnings loss when displaced workers take lower-paid jobs.”