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Watch Out Singaporeans, Your Real Earnings Start Falling Once You Hit 38

Baey's best friend and greatest rival

Baey’s best friend and greatest rival

We refer to the article ”Re-employment age for Singapore’s public servants to be extended to 67 from Jan 2015″ (Straits Times,  Oct 3).

Civil service extends re-employment to 67

It states that “The announcement was welcomed by the labour movement, which has been pushing for legislation to raise the re-employment age to 67.

This will make it mandatory for companies to offer to rehire their workers after they turn 65.”

Set example and disclose statistics?

  • Since the civil service is taking the lead to set an example for the private sector, why not set the example for hiring Singaporeans first and ex-offenders, by disclosing the statistics on these?

Compensation $4,500 to $10,000 only?

As to ”Eligible public officers who wish to continue working, can do so on the same job with the same pay and benefits, if the job is available.

Otherwise, they will be helped to find suitable jobs within or outside their agency.

If none is available, they will be paid by the agency to help make the adjustment while they look for another job”

  • If the employer does not want even to offer any terms of re-employment – it’s just a one-time payment of $4,500 to $10,000.

Not fit?

The employer can also choose not to offer re-employment to the employee if the employee is assessed by his employer to not have satisfactory work performance or not medically fit to continue working.

It is stated in Ministry of Manpower (MOM)’s website that employees can seek help if they have any re-employment dispute: By seeking the union’s advice and assistance (if the employee is a union member); Notify the Commissioner for Labour (COL) in writing: No later than 1 month after the last day of employment if he is not offered re-employment and if he disputes the employer’s grounds for not offering re-employment including not meeting the re-employment eligibility criteria of satisfactory work performance and medically fitness, no suitable job vacancy or dismissal during re-employment;  or No later than 6 months after the last day of employment if he feels that the terms and conditions of the re-employment offer and/ or the Employment Assistance Payment (EAP) amount offered is/ are unreasonable.

How many complain?

No records have been made public about the number of cases handled by MOM over such disputes.

The Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) on the other hand has publicly announced that it received 1,055 complaints against employers over the last 3 years but only 12 cases heard within the same period of time.

The re-employment legislation is a joke?

Our re-employment legislation primarily allows the supervisor of the worker and the company to determine whether the worker is “healthy” enough to be offered re-employment.

Also, an employer can offer any terms – huge pay cut, longer work hours, heavier work load, etc – and if the employee does not accept – the employer would have fulfilled their obligations under the legislation.

Another issue related to the re-employment act, may be that there is widespread age discrimination in regards to wages in Singapore.

MOM commissioned study?

A MOM commissioned study at a local university concluded that Singaporeans are expected to be more adequately prepared to retire than the average of the OECD countries.

Real wage growth declines with age?

According to the Retirement Study (“Retirement Study: High IRR?“, Nov 15), “In contrast to previous studies which assumed constant wage growth, we used data collected by the Ministry of Manpower (MOM) for the Labour Force Survey (LFS) over 2001 to 2011 to simulate real wage growth paths for individuals”.

“It is a hump-shaped distribution of earnings by age where wage growth is faster when the worker is young and tapers off into the negative as he gets older”.

From the graph in the study, it appears that real earnings start to decline from around age 38, for males at the 50th percentile for earnings.

Our understanding is that at age 55, which is the age used to compute the Income Replacement Ratio (IRR), the real earnings would be about the same as that at around age 33.

So, does this mean that we are assuming that one would be earning at age 55, the real earnings equivalent of what one earned at around 33?

Is the above not statistical evidence that there is an existing age discrimination against older workers, since real wage growth declines with age, particularly for lower-wage occupations?

This commentary was written by SY Lee and Leong Sze Hian.
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