PETALING JAYA: While there are advantages to raising the retirement age, stakeholders and experts agree that it may not be viable yet in Malaysia.
Among the concerns are greater challenges in getting jobs for the younger generation and the financial implications for the government.
Universiti Malaya professor of economics Datuk Dr Rajah Rasiah noted that with life expectancy rising, keeping older people employed would reduce the dependency ratio as more of the productive population will be supporting the young and the old.
“This will be a boost for the gross domestic product (GDP),” he told theSun.
Rajah pointed out that it will also offer secure income for the senior years. “Withdrawals from the EPF can also be delayed to soften the impact of inflation,” he added.
He said this is more crucial now given that for a vast majority of employees, their EPF savings have been significantly depleted through withdrawals under the various schemes to meet the economic challenges of Covid-19.
For the government, Rajah said, keeping seniors on the job longer would raise the remuneration budget for a civil service that is already considered bloated.
He also pointed out that productivity may not remain at peak levels as one ages. “With an older workforce, the country’s competitiveness may diminish,” he said.
Rajah said health issues also arise with advanced age, and it may cost employers more in healthcare.
On the comparisons with Singapore, he pointed out that while both countries are net importers of labour, the island republic’s labour market management has been more effective in responding to demand-and-supply changes.
Singapore is raising the retirement age from 62 to 63 years from 2022, while the retirement age in Malaysia was raised from 55 to 60 in 2013.
Malaysian Employers Federation president Datuk Dr Syed Hussain Syed Husman proposed that rather than raise the retirement age above 60, an employee could continue working based on mutual agreement with the employer.
“Such an agreement should take into account factors such as the employee’s health, performance and whether or not the company still requires his services,” he told theSun.
“Older workers can be retained on a fixed-term contract basis to give employer and employee greater flexibility,” he added.
Syed Hussain said raising the retirement age to 65 as proposed would increase unemployment among the younger people. He said that when the retirement age was raised in 2013, more than a million fresh graduates were left without opportunity for employment.
“Employers could no longer absorb school-leavers and fresh graduates to take up roles that should have been left vacant by those who have reached retirement age,” he said.
Syed Hussain said it is also not ideal now for Malaysia to implement a blanket increase in the statutory retirement age given that the overall unemployment rate has risen to 4.6% in August.
“Among the youth, the unemployment rate is now as high as 11%, thanks to the economic uncertainty caused by the pandemic,” he said.
He said the only way that the retirement age can be raised is if Malaysia is able to attract more foreign direct investments (FDI), like Singapore.
The influx of FDI into Singapore has resulted in a strong demand for labour. “We need to bring in more FDI so that there will be a bigger demand for labour, even for those aged 60 and above,” he said.
Syed Hussain said businesses are also concerned that employees aged 60 and above may no longer be as adept at picking up new skills to meet the digitalisation needs of the Fourth Industrial Revolution.
“The younger workers are more suited at mastering the fast-evolving new technology,” he added.
