The contours of the workforce across the globe are changing rapidly and most developed countries are experiencing a similar intimidating phenomenon: a rapidly-ageing labour force and an insufficient pool of young workers to replace the mature ones. Research findings confirm that Singapore faces the same dilemma. With falling birth rates and rising life expectancy, Singapore's population will only grow older in times to come. In 2004, the percentage of older workers aged 50 and above constituted 22% of the labour force, or about 380,000 workers.
According to the Ministry of Manpower, this is projected to further increase to 29% or 600,000 workers by 2015. The statistics strongly indicate that the time has come for companies to sit up, address the issue and tackle the challenge before the problem begins to stifle the economic growth of the nation.
Begin with changing mindsets
Recent research provides further evidence that most mature workers today want to remain in the corporate mainstream - a development viewed as positive by both employers and employees. In fact, with changing perceptions of older workers across the world, many countries are finding that keeping a graying workforce on the payroll no longer has a negative impact on productivity; rather, it's considered beneficial in terms of long-term results. The question that naturally crops up is this: where is Singapore today in terms of changing its policies, practices and mindsets for mature workers?
To address this burning issue and bring about a similar shift in mindset for Singapore, a Tripartite Committee on Employability of Older Workers was set up in March 2005. The committee recommended measures to enhance the employability of older workers and help them stay employed longer. It also recommends raising the effective retirement age above 62 years, and to positively shape the perceptions and mindsets of employers and employees towards the employment of older workers. But have employers started to realise the need to address the change?
"I can understand the concerns of businesses and employers in hiring older workers," says Gan Kim Yong, Minister of State for Manpower and Education, and chair of the Tripartite Committee (Tricom) on Older Workers. "While some of the concerns are really tangible, others may be a result of misperceptions. Whether real or perceived, both impact the extent to which older workers are absorbed into the workforce and both must be duly addressed."
Some employers are already following the guidelines. For example, Dairy Farm Singapore recruits and selects employees based on their suitability rather than their age. Avago Technologies Manufacturing has adopted a competitive wage system that is driven by performance, ensuring that age is not a factor in wage determination, and Old Chang Kee has implemented a flexi-work arrangement to employ mature homemakers who need to supplement their household income but can only work during certain hours.
However, these are rare cases, and Gan admits that the issue of shaping perceptions is complex and has to be approached from many angles. "It takes time to change. We want to emphasise to employers the value that older workers bring to their organisations. Retaining older workers will mean retaining their skills, knowledge and experience within the organisation, thus giving the organisation a competitive edge," he says.
The Tricom's recommendations
Gan also feels that older workers generally possess certain traits, such as reliability, loyalty and patience, and these are positive qualities that older workers could help to inculcate in the younger staff. To this end, Gan says, the Tripartite partners will be undertaking various measures to shape positive perceptions towards older workers, including:
a) Outreach programs to promote age-friendly employment practices, and to positively shape public perceptions towards older workers. This includes industry outreach, publication of an Age Management Guide to help companies implement age-friendly HR practices, and conducting a targeted awareness effort to positively shape perceptions about older workers. In particular, SNEF will conduct industry outreach in collaboration with unions and the government under the newly formed Tripartite Action Group to promote changes to employment practices and help companies implement these changes.
b) Formation of the Tripartite Alliance for Fair Employment Practices. This will comprise members from NTUC, SNEF and MOM to promote fair and responsible employment practices. The alliance will start by publishing guidelines and good practices to shape corporate behaviour. It will also recognise employers that are exemplary in implementing fair employment practices.
c) Updating the Code of Responsible Employment Practices to serve as a guide for responsible practices towards hiring and managing older workers, and publishing a handbook to assist companies in implementing the practices promulgated in the Code
d) Updating and refining the Tripartite Guidelines on Non-Discriminatory Job Advertisements.
Agreeing that changing perceptions is much harder than providing funds, professional advice or technical equipment, Halimah Yacob, assistant secretary-general, National Trades Union Congress (NTUC), observes: "This is a long-term process and requires a major cultural shift in values. What is the core value that companies should imbibe and practice? It is that all employees are able to contribute effectively if given the right opportunities and motivation. Why is this change necessary? It's because our population is ageing rapidly and our workforce will reflect that change as well. If companies who are now starting to feel the strain of recruiting workers because of a tighter labour market do not change their human resource model, they will suffer because there will not be enough young workers to run their operations.
"Society as a whole will suffer because older Singaporeans who continue to remain productive and willing to work and who need the income to meet their retirement needs will feel resentful that they are denied of the opportunities. The Tripartite partners are trying to deal with these issues head on with various initiatives already described by MOM. The NTUC is working closely with our management partners to help workers aged over 62 to continue working."
To date, Yacob says that about 70 companies already have one or more initiatives in place to retain their older workers. These initiatives include older worker-friendly HR policies, wage restructuring, retraining or considering alternative options for the re-employment of older workers. "We also invite individual companies to share and discuss with us about the re-employment status of their employees before they retire," she says. "In fact, with a tighter labour market, some companies have shared with us that they find that older workers are better as they are more stable and are more likely to stay compared to younger workers."
Tapping the strengths of mature workers
Apart from promoting the adoption of progressive HR practices, the government has also launched the ADVANTAGE! scheme, which provides incentives for companies to redesign jobs and work processes to cater to the needs of mature workers. This includes incentives to help older workers find jobs through placement and upgrading their skills to help them adapt to a new and ever-changing work environment. Since the scheme rolled out, 31 companies have come on board, Gan says. "Together, they have committed to hire more than 800 older workers, retain 480 workers approaching or above age 62, and have implemented job redesign projects that will improve the work of 4,400 older workers." These companies span across various sectors, including manufacturing, hotels, F&B, retail, public transportation, and healthcare.
Furthermore, regarding the re-employment of older workers, the committee has introduced a new set of Tripartite guidelines. These include providing flexible work arrangements and enabling wages to reflect the value of the contribution of workers. But how would the committee address the cost of maintaining an older workforce when healthcare costs are escalating rapidly? "It's a common practice for employers to provide medical benefits for their employees," Gan says. "As a result, the more comprehensive the medical benefits provided, the heavier the consideration for medical expenditure in the hiring decision by companies in taking on older workers. One possible way to moderate this effect would be a scheme such as the Portable Medical Benefits Scheme (PMBS) whereby an employer pays an additional 1% of an employee's salary into his Medisave account, in lieu of the employer's group medical insurance. This enables the employee to purchase his own Medisave-approved medical insurance products."
In this way, companies would be paying the same amount in medical benefits for workers earning the same wage, regardless of age, and the worker can have portable medical coverage.
"We understand employers' concerns over the cost of employing or retaining older workers and we are willing to be flexible and discuss these cost issues," Madam Halimah says. "For healthcare costs, there is a committee that has been working on this for quite some time. If the recommendations are implemented, this would help to contain healthcare costs for employers. At the same time, it would also ensure that the older workers are provided with medical benefits as currently some employers do not cover them at all."
Also, the Singapore Workforce Development Agency (WDA) has recently published an Age-Friendly Employment Practices guide to encourage employers to adopt HR practices that can help them better tap on the strengths of older workers. The guide complements the other initiatives by the Tripartite Committee, which include the recent awareness campaign with the tagline of 'The Advantage is Yours', and the formation of the Tripartite Alliance for Fair Employment Practices (TAFEP).
Supporting the initiative, Stephen Lee, president of Singapore National Employers Federation (SNEF), says: "The Age-Friendly Employment Practices guide relates the many positive experiences of companies in their effort to implement age friendly practices. SNEF/TAG will take the lead to promote the guide to companies to help them implement responsible employment practices. SNEF will also use the guide in its training programs on Responsible Employment Practices for managers and HR practitioners."
Japan is facing similar challenges of an ageing workforce as well as the same need to help older workers work longer. It has decided to legislate that companies either:
(i) raise the mandatory retirement age from 60 to 65 years
(ii) offer re-employment to workers at the age of 60 years
(iii) remove mandatory retirement altogether
The Tripartite Committee notes that the Japanese approach - in particular the obligation for companies to offer re-employment to workers when they reach the mandatory retirement age - is a flexible one and may be suitable for Singapore.
While Japan has made it mandatory for companies to offer re-employment to workers approaching retirement age, it has built in some flexibility to allow companies to selectively re-employ only deserving retiring workers. The re-employment offer could be based on certain standards or criteria negotiated with the unions/workers.
"Re-employment after the statutory retirement age would not be a right of the worker, but contingent on him meeting certain re-employment criteria. Companies could also re-contract and re-negotiate the job responsibilities, wage and benefits of re-employed workers to reflect their job worth. This will address companies' concerns about the high cost of retaining older workers due to their seniority-based wages," Gan says.
As recommended by the Tripartite Committee, the government will study Japan's system to consider if it can be adapted to suit Singapore. "At some point, we'll have to assess whether such an approach is effective," Halimah says. "If it's not so effective, the legislative approach of the Japanese would be useful. Their approach has the benefit of flexibility, as the re-offer of employment is subject to performance and other criteria, but at the same time there is some element of compulsion, as the employer is obliged to offer re-employment on terms to be agreed if these conditions are met."
What lies ahead?
But how will the government ensure that a non-discriminatory recruitment policy is followed by employers? Will there be a penalty for discrimination, if reported?
SNEF's Lee says that all genuine cases will be referred to the Ministry of Manpower for investigation. "It will take appropriate action, including counseling, warning and administrative measures against employers who are found to have adopted discriminatory practices," Gan adds. He feels that most employers have been receptive and have made the necessary changes after counseling.
To date, the Job Recreation Program (JRP), Skills Redevelopment Programme (SRP) and Workforce Skills Qualification (WSQ) have been initiatives designed to help turn older workers into value-adding assets to the organisation. The effectiveness of these programs is reviewed regularly. "We regularly review the effectiveness of our schemes and make adjustments or introduce new schemes where necessary," Gan says. "For example, we introduced the Advantage! scheme earlier this year as a direct response to address the employment of older workers. The other programs have been effective, and we will continue to improve them."
Last year, under the JRP, NTUC and WDA recreated 7,200 jobs into higher pay and more attractive jobs, and placed 4,600 job seekers. This year, the partners are aiming to recreate 10,000 jobs. There are also many efforts, under SRP and also various Place and Train schemes, to re-skill workers so that they can take up new jobs. "Last year, we placed about 1,500 job seekers through these schemes. Under SRP, we also supported the training of some 34,000 in-employment workers last year, for various skills," Gan says.
NTUC's survey showed that employers and workers have found the training useful. As for WSQ, this is not a scheme, but a set of national qualifications that WDA is developing with various industry players. "In developing the qualifications framework, we will identify the competencies, chart the progression pathways, and help enhance the professionalism of the workforce in these industries," Gan says. "WSQ therefore lays a common foundation for skills training and upgrading in Singapore. And because competencies learnt in one industry can be recognised in another, WSQ also enhances skills portability and flexibility in the workforce. With this foundation, we can sharpen the effectiveness of all our initiatives targeted at workers, such as JRP, SRP and Place and Train programs."
While the Singapore government drives the agenda of older workers, companies will continue to face an increasingly competitive global environment and large shifts in the demographic profile of the country. Companies will therefore also need to introduce and implement progressive policies and practices to better attract and retain employees with diverse backgrounds and experiences. Simply put, fair employment practices can give your company a competitive edge over those still battling with the dilemma of whether or not to hire mature workers. HRM