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Speech at Age Friendly Workforce Asia Conference

Mr Tan Chuan-Jin, Minister of State for Manpower and National Development, Level 7 Auditorium, NTUC Centre, One Marina Boulevard

Employment practices
Distinguished Guests

Ladies and Gentlemen

A very good morning to all of you.

Introduction 
  1. I would like to start by thanking the Rotary Club of Jurong Town for inviting me to the inaugural Age Friendly Workforce Asia conference. This is the first such conference in Asia that brings together CEOs, Managing Directors, General Managers and HR directors to discuss ideas on healthy ageing and lifelong employability in the workplace. I am glad that you have found the time to participate in what I think is a very meaningful event.

    Singapore's Landscape – Implications of Our Ageing Population
  2. The focus of the conference on an age friendly workforce is timely in Singapore for a variety of reasons.
  3. Firstly, as Professor Leo has shared with us, Singapore has an ageing population and workforce. Our life expectancy has increased steadily over the years, and will continue to rise. Today, if you are all aged 65 years, half of you can expect to live beyond 85 years, in other words, at least another 20 more years. It means that as Singaporeans live longer, they will need to be able to support themselves for longer. Are most Singaporeans saving enough? Two months ago, I gave a CPF talk, and it is about the same thing. Do we save enough? It is useful to ask ourselves how many Singaporeans do plan adequately? Do we need to work longer and save more to last the distance? Some may not have a choice but to work. For others, continuing to work may not only be for the income, but also because they want to continue to be active in society, contribute economically and derive job satisfaction from meaningful work. There will also be some who choose not to work all together. These developments will see our employment landscape change, both for employees and for employers.
  4. In fact, we have seen the types of jobs available to our workers changing over the last ten or twenty years. Jobs in the services sector now make up about 70% of employment in Singapore, and 78% of local employees aged 50 and above are working in the services sector1. Technology has also greatly enhanced the ability of our workers to remain productive. In other words, our job landscape is increasingly better able to accommodate older workers, and for longer.
  5. With today's tight labour market and the need to moderate the reliance on foreign manpower, so for those of you who are employers, we are tightening up. It makes business sense to recruit and retain our older workers. Employers should tap on the valuable pool of an older workforce and harness their wealth of experience, skills and knowledge. We should put in place measures to best harness our older workforce as it would position us well for the inevitable change in profile of our workers. It is not unique to Singapore. It is happening in many developed countries and cities. Of all countries, Singapore is well-placed to ride this wave.
  6. Second, with our low birth rate, the rate of increase in Singaporeans entering the workforce will slow down. With both longer life-spans and a low birth rate, our population and workforce will grow older. At the same time, employers also need to take into account these demographic realities in their manpower planning and include more older employees in their workforce. This will be a major structural shift and we need to understand what it means for our society and our economy. There is a lot of impact in terms of policies, in terms of population augmentation, whether to rely on it, what is the right pace to do it. Foreign workers will continue to play a part, but we also need to manage the numbers because given our physical constraints, we cannot continue to grow at the rate we have been growing at previously. It is going to be hugely significant for us in many ways as we plan for our people's older years. Housing, healthcare, retirement needs and so on. On housing, which is my other hat in MND, we need to figure out your new townships, how do you develop them? Do you build blocks of flats where you have a mix of flats – 5-room, 4-room, studio apartments – so that you can age in place. As you get older, you become less comfortable in shifting. Are we able to live nearer our families? All this has to be factored in our development plans moving forward. This is not trivial. And to top it all, support all this, a smaller younger generation. The ratio highlighted earlier is 1 in 3. What will be the state of the economy then? Today I think we are doing well. We look forward to continuing to do well. But at that stage, and with an ageing population, we assume that we will continue enjoy the growth that we do today? Will we be able to maintain a thriving and competitive economy then? Government spending in this area would invariably increase significantly. What does this all mean?

    Re-employment Legislation
  7. Given this trend, we aim to enable our workers to stay employed and work longer, beyond the current minimum retirement age of 62. We have deliberated this for a while. The tripartite partners have agreed on the approach of re-employment is something we will embark on. So from 1 January next year, which is just 2 months away, employers will be required to re-employ their eligible workers three years beyond age 62, up to age 65. This is not a new initiative. It is something that we saw on the horizon a number of years back, and have been making references to this move for a while, so that we are mentally prepared. You can see that it is important to prepare society. You can see the resistance encountered in Europe when they sought to raise the number of years of work.
  8. Why re-employment? We believe that re-employment provides flexibility for both employers and workers to make necessary adjustments to employment terms and conditions, as well as job arrangements, to meet their respective needs. It need not be on the same job or on the same terms, it is up to the employer and the workers to negotiate. It is this flexibility that allows the worker to work longer, as long as he or she is fit and has shown satisfactory performance. At the same time, this flexibility ensures that the obligation to re-employ does not impose undue burden on the employers. It also gives flexibility for the employers to redeploy their re-employed workers according to business needs, and meet the needs of some workers who may want to take up a different role or a lighter job to have more time with their families.

    Re-employment Readiness
  9. The tripartite partners have worked together from as far back as 2007 to prepare employers and employees for re-employment. One key document is the Tripartite Guidelines on the Re-employment of Older Employees, which has been refined over the years based on feedback from employers, unions and workers. The Tripartite Guidelines identify good re-employment practices that employers should consider adopting, such as planning and engaging their employees on re-employment at least 6 months ahead of re-employment, job arrangements, as well as the principles on adjustments to wage and other re-employment terms.
  10. There are also many other resources available. The tripartite partners have set up a comprehensive one-stop online portal, which provides an information resource for all matters relating to re-employment. There are also guidebooks made available to employers and employees to help them understand and implement re-employment. For instance, the employer guidebook contains not just the tripartite guidelines, but also case studies of employers who have successfully implemented re-employment in their organisations, and a re-employment readiness checklist. If for some reason you do not already have a copy, I urge you to refer to the online version at the re-employment web portal, or approach SNEF, NTUC or MOM. As employers, it is also important to bear in mind how we treat older workers, because the younger workers will observe this, as they will someday be older workers. Building a great organisation is a lot to do with how we treat our people. This is an opportunity for us to retune how we look at things, and put in place what we believe to be progressive and positive work practices.
  11. Over the past year, the tripartite partners have also organised briefings to over 1,500 employers, industry associations, unions and other stakeholders. Last year, MOM ran a Re-employment Readiness public campaign to generate mass awareness on the issue. As we head into the final months before 1 January, we are rolling out a second, more targeted phase of the campaign, which will focus on actual implementation.
  12. There are also various programmes in place to help employers implement systems to handle re-employment and to improve the overall employment of older workers. The ADVANTAGE! Scheme was launched in 2007 to support companies' efforts to recruit, retain and re-employ older workers. For mature workers earning low wages, we introduced the Workfare Training Support (WTS) scheme in 2010 to enhance their employability through skills training and upgrading. Employers of such workers can receive up to 95% in course fee and absentee payroll funding – that is quite substantial, while workers themselves can get up to $400 per year in training commitment award on top of the Workfare payments that they receive. We also introduced the Special Employment Credit in this year's Budget to improve the employability of low-wage mature workers by reducing the cost of hiring them. Employers get a credit of up to 80% of the employer CPF contributions that they make to each such Singaporean worker. Taken a whole, there is a slew of initiatives to help companies employ older workers.
  13. So, are we ready for re-employment? Our sense is that most employers are re-employment ready. Many employers, including larger companies and those in the unionised sector, have already implemented re-employment. There are also businesses, including SMEs, who intend simply to continue employing the worker past 62 until 65 or even older, with little or no change to employment terms.
  14. I am also encouraged that the employment rate for residents aged 55 to 64 rose from 57.2% in 2009 to a new high of 59.0% in 2010. With re-employment, even more employees would have the opportunity to work beyond age 62. This will help us achieve the target of an employment rate of 65% for those aged 55 to 64 by 2015, and bring us closer to the mature worker employment rates in advanced economies such as Japan and Sweden.
  15. Therefore, for those employers out there who are still not re-employment ready for some reason or other, I strongly urge you to take action now. Assess your readiness, tap on all the available resources and assistance, and make the necessary adjustments because in less than two months, the re-employment legislation will come into force. This will mark the culmination of many years of strong tripartite collaboration to secure the opportunity for workers to work longer, and for employers to be able to continue employing them.

    Age-friendly Workplaces
  16. Just helping workers to work longer through re-employment is not enough to raise the employment of older workers. We need to also work on facilitating an age-friendly workplace and environment, so that older workers can be an integral and critical part of our workforce. As we go forward, we will not have access to many younger workers (with our falling birth rate). So it behoves us to move rapidly, embrace the older workforce, get up to speed, and be in a good position to take advantage. Take McDonald's, for example. McDonald's has an explicit inclusive work policy that aims to give every employee the opportunity to learn and benefit from, regardless of age. To tap the pool of mature workers, McDonald's upgraded its cash registers to touch-screens with visual representation of each menu item. This reduces eye strain – which is a huge benefit for older workers – but it also has the effect of speeding up service for all of its workers, not just the older workers. It is especially helpful, since a lot of Singaporeans are shorted-sighted as well. McDonald's has also implemented various flexible work arrangements, including more service shifts, to enable it to cater to the needs of its employees.
  17. The Tripartite Alliance for Fair Employment Practices, or TAFEP, has been promoting fair and responsible employment practices, including age-neutral HR practices. To date, more than 1,800 employers representing over 650,000 employees have signed the Employers' Pledge of Fair Employment Practices. I am happy to note that the Rotary Clubs will be adding their names to this list after this speech. This year, TAFEP also developed and launched the "Effective Management of Mature Employees" workshop, which equips employers with practical knowledge and skills in managing an older workforce. I also understand that in your seminar pack, TAFEP has included a copy of its research publication, "Hiring the Silver Generation", which provides useful insights to employers and jobseekers on the employment of mature workers. Two key findings that the publication has surfaced are: first, diversifying the age composition of the recruitment selection panel helps to surface more numbers of suitable mature candidates for consideration. This improves the chance that the organisation is able to identify a mature candidate and ultimately hire him or her. Second, providing flexible work arrangements as part of the company's HR policy helps widen the pool of mature jobseekers, again increasing the probability of finding the best talent for the job.

    Conclusion
  18. In conclusion, these and other issues will be the subject of your discussions today and tomorrow. Let me emphasise again the importance of understanding these developments and the magnitude of their impact. Some have used the term 'Silver Tsunami', and it is for good reason that they describe it as such. Like a Tsunami, we can see it building up and rolling across the ocean of time. At some point, it is going to l reach the shore. It is an inevitable reality, and will happen in the very near future - not just for us, but for most in the developed world.
  19. There will be challenges, but as I think of the various countries grappling with this, I believe we are well-placed to ride these huge waves. It will require structural changes in our urban development and the way we organise ourselves as a society and economy. The employment environment must change. Most importantly, we need to have a cultural and mindset shift. That is the most fundamental change that needs to take place.
  20. Do spend this time to reflect and discuss about these issues over the next few days and beyond. Your insights and perspectives would be important for our national conversations as we prepare and look forward to this future phase for our country.
  21. With that, I wish you a fruitful conference. Thank you.
1 As at June 2010. Source: Labour Force Survey, MOM