"This will ensure that the payments do not impose undue burdens on employers or become an easy alternative to re-employing workers, he said. He was responding to a concern raised in Parliament by Member of Parliament Lee Bee Wah (Ang Mo Kio GRC) that the EAP may burden small and medium enterprises, and cause some to lay off their ageing workers to avoid the payouts. " - CNA Report.
No...I'm not going to criticise Lee Bee Wah for being pro-business or suggesting businesses will resort to unethical behavior.
If you haven't been following what is going on, as usual, here is a summary:
1. A increasing number of our workers are ageing - by 2030, 20% will reach > 65 years of age.
2. The govt is working on a set of guidelines to encourage employers to rehire workers who reach retirement age of 62 and have good performance and are healthy.
3. It has been suggested that 3 months before the employee is retired, a rehire plan should be offered to him.
4. If the company can't reemploy him and has to let him go, they should pay a sum of money to assist the retired worker - they are working on guidelines for this sum. This payout is known as Employment Assistance Payment (EAP).
Lee Bee Wah was saying that if there is compensation involved, companies may act unethically and layoff/sack workers before they retire to avoid this payout.
There are other fears:
But during an hour-long dialogue following his announcement, several union leaders voiced concerns that some companies might use the EAP as a way to get rid of older workers.
Labour chief Lim Swee Say, who was on the panel that includes Mr Gan and Singapore National Employers Federation (SNEF) president Stephen Lee, allayed their fears by pledging that the labour movement would intervene in such cases.
He pointed to the labour movement's current focus on building a more inclusive workforce with a CBF (cheaper, better and faster) economy.[Link]
What the above paragraph is saying is once EAP is in place, companies who want to get rid of older retired workers can do it with a clear conscience since the govt stipulated an EAP amount.
Currently a set of draft guidelines has been released in Nov 2009 [Link]and this will form the core of the law to be passed by 2012 for re-employment up to age 65, and later, up to 67.
I've been following the development of these guidelines for some time and listening to some of the feedback and it really dawned on my how much working world has changed - from my father's time when he stepped into the workforce 45 years ago, the day I joined the work force and the young people entering the workforce today. My dad worked as a technician in various companies and had 3 jobs in life time - every job he took, the companies had pension plan for workers who stayed with the company for a decade or 2....the company would like to you to stay for as long as possible and would reward you for your loyalty as a worker. My dad is 70 years old today and his last job came with full pension and some medical benefits. Looking back at the day I joined the workforce more than 15 yrs ago, although the pension schemes of my father's time were gone, employers were expected to keep workers for long periods so there were generous compensations when they retrenched workers - one month pay for every year with the company.
In today's hire-and-fire world, more often than not, the young people joining the workforce are put on 1 year or 2 year contracts. They are easily laid off once projects are over and companies don't need them. Because of this hire and fire mentality, companies are reluctant to train staff. It was common during my time for IT professionals to spend the 1st year attending courses paid by the company. IBM in the early 90s spent 1 year to train each sales engineer because in those days they were expected to stay 5-10 years or even longer.Today, it is quite common for me to interview young people who had three jobs in 5 years and what sometimes impresses me is they paid for all the IT certification courses they attended out of their own pockets to improve their employability.
It is estimated that workers joining today's workforce with change jobs 10-14 times[Link]. I really wonder if loyality among workers still has any value. If a worker has a job and is heading towards his retirement,say in 2020, it is likely that he is on that job for less than 3 years. The retirement day is similar to an 'end of contract'. If the company needs him, they will keep him ...if the company doesn't, they pay a minimum compensation and let him go. The only difference the new set of guidelines makes is the company has to pay the aged worker a small sum to send him off to his retirement. Even then, as MP Lee Bee Wah mentioned companies can get unethical and avoid the payment.
IMHO, the real solution to all this is to have a tighter labour market. Companies keep older workers longer if it is not so easy to hire new younger workers easily. The guidelines the MoM is trying to push out will not be effective so long as they have a liberal foreign worker policy.
Looking at how working life and job stability has changed over the years, what is really the selling point of the PAP's CBF (cheaper, better, faster) system? Where are we racing towards? Struggle more for less...less job security, less benefits? We seem to be working harder than we did in the past not for a better life but a tougher less secure future. Work longer, work forever, work faster ..work cheaper...really what is the end goal of all this? What really is the selling point...and how are younger people expected to support such a system?!
Guidelines to state size of retirement payout Minimum and maximum sums for the Employment Assistance Payment will be stipulated.
Wed, Jan 13, 2010my paper
UPCOMING re-employment guidelines will include recommendations on how much companies need to pay their older workers who have hit retirement age, if the businesses no longer have jobs for them.
Minimum and maximum sums for the Employment Assistance Payment (EAP) will be stipulated, said Manpower Minister Gan Kim Yong yesterday.
This will ensure that the payments do not impose undue burdens on employers or become an easy alternative to re-employing workers, he said.
He was responding to a concern raised in Parliament by Member of Parliament Lee Bee Wah (Ang Mo Kio GRC) that the EAP may burden small and medium enterprises, and cause some to lay off their ageing workers to avoid the payouts. The EAP aims to tide such workers over the
period when they are looking for another job.
It is among proposals to facilitate the re-hiring of older workers which will form the core of a law to be passed by 2012 for the re-hiring of workers aged up to 65 and, subsequently, up to 67.