The Government is aware of business cost pressures posed by an upcoming hike in Central Provident Fund (CPF) contribution rates for older workers, as well as a rise in the retirement and re-employment ages, Trade and Industry Minister Chan Chun Sing said yesterday.
But he stressed that the changes will be implemented gradually, over a period of 10 years or so, while taking into account business conditions at every step of the way.
Speaking on the sidelines of a visit to wholesale distributor Hai Sia Seafood, he added that consultations are ongoing with business partners to understand their challenges, both on business costs and in the larger external environment.
His comments come after Prime Minister Lee Hsien Loong announced at the National Day Rally that CPF contribution rates for workers aged 55 to 70 will be raised gradually from 2021. The hike will see both employers and employees contributing more. There will also be a rise in the statutory retirement age from 62 to 63 in 2022, and to 65 by 2030, and the re-employment age will go up from 67 now to 68 in 2022, and 70 by 2030.
"We are of course very cognisant of the business cost pressures... but we think that it is the correct thing to do to ensure that our workers have sufficient retirement savings," said Mr Chan. "By lengthening careers, it also allows people who live longer the chance to contribute meaningfully to society."
More details on measures to help smaller companies cope will be unveiled closer to next year's Budget, he said, adding that beyond trying to reduce cost, there is also a need to increase businesses' revenue.
He also highlighted the roles that firms and workers have to play in a changing employment landscape.
Companies such as Hai Sia have helped older workers stay employed by redesigning jobs, said Mr Chan. The hope is that other firms and the public sector will do so too.
Workers, too, need to continue retraining and preparing for their next jobs, which will help them be ready for a longer career span.
The issues on older workers have been discussed for many years, Mr Chan said, and tripartite partners share the same concerns on ensuring retirement adequacy and providing meaningful careers over longer time spans.
"The question is, how do we make this transition? If we make it too sharp too fast, it is difficult for the business to adjust, especially in a challenging external economic environment," he said. "If we make it too slow, we will deprive many cohorts of older workers the chance to stay meaningfully employed."
The current plan strikes a good balance, he said.
Mr Ang Junting, deputy director of Hai Sia Seafood, said its ageing workforce and challenges in hiring new staff were key push factors towards job redesign. Its new machines have made it easier for older workers to carry out tasks such as slicing fish more efficiently.
"When it is difficult for us to hire locals, we think about how we can maximise... those who are willing to work in our industry," he said. "We are also actively hiring more older workers."