Should Malaysia Raise the Statutory Retirement Age?

Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan said that the government should adopt a re-employment policy for people aged 60 and above. He said that this action would help keep senior citizens in employment past the retirement age. 

He added that the policy would allow Malaysia to have a million more experienced workers to drive economic growth. 

Shamsuddin said that Singapore implemented a similar policy. It was the preferred choice for senior workers to stay in employment, in contrast to further increasing the statutory retirement age, affecting the labour market. 

He stated that the government can try to harness human resources from people in the senior age group. While they are not as physically strong as before, they are still experienced. He added that the policy could allow their re-employment until the age of 65, which would see an extra one million workforce in Malaysia. 

Shamsuddin said that an implementation of a blanket increase on the retirement age to 65 or beyond could affect the labour market and cause an increase in unemployment among the younger generation. 

The problem with raising the retirement age

In July 2013, he stated that Malaysia had raised the retirement age to 60 from 55, which led to a loss of about 1 million job openings for graduates. Following the retirement age increase, people who should have retired stayed employed for another five years.

He said that employers experienced a problem in absorbing school-leavers to fill up positions that should have been left open by the retirees. The private sector would have about 200,000 retirees every year; hence in five years, the employers would retain a million of them by July 2018.

The retirement age in ASEAN countries. Source: The Star

According to him, the effects on the labour market was severe and hindered the employers' ability to create more jobs. 

The pandemic and economic uncertainties had caused an increase in the unemployment rate. Shamsuddin said that it was not the right time for the government to perform a blanket increase in the statutory retirement age. 

He clarified that older people should be encouraged to stay employed, but depending on their performance and health status. Rehiring those deemed fit to contribute to the companies on a contractual basis is a better method than implementing a blanket increase in retirement age. 

Singapore

The Manpower Minister, Josephine Teo stated that raising the statutory retirement age to 64 and the re-employment age to 68 would continue as planned on July 1, 2021. Teo said this action would keep Singapore on track to increasing the retirement age to 65 and the re-employment age to 70 by 2030.

World Bank Group

In December 2020, World Bank Group's representative to Malaysia Firas Raad had said that the country must review its retirement age policy as it was becoming an ageing society. 

According to the international convention, an ageing society has 7% or more of the population aged 65 and above. Firas stated that rapid ageing meant that the people would have to work longer. 

Compared to other upper-middle and high-income nations, the employment rate of those aged between 55 and 64 in Malaysia was low, notably among women. 

In South Korea, Thailand and Japan, over 65% of people aged 55 to 64 are active in the job market. In Malaysia, only 45% of those aged between 55 and 64 were involved in the job market.

Firas stated that one policy option was to gradually raise the minimum retirement age from 60 to 65 and link it to life expectancy after that. 

Malaysian Trades Union Congress (MTUC)

The acting president of MTUC, Mohd Effendy Abdul Ghani, said that now was not the best time to raise the retirement age as it would hamper efforts to reinvigorate the job market and economy. 

He said that the government could consider adopting a re-employment policy. The pandemic has led to a higher retrenchment number. With the influx of new graduates, increasing the retirement age will only worsen the labour market.

He clarified that he did not object to increasing the retirement age but believes that the government should concentrate on creating more jobs for graduates, reducing the migrant workers' numbers and raising the minimum wage.

Source: NST

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