SINGAPORE — From July, the re-employment age will go up from 65 to 67 and employers will no longer have the option to cut employees’ wages at the age of 60.

But employers will have more flexibility through the option of allowing consenting, eligible employees to be re-employed by another employer, under changes to the Retirement and Re-employment Act that were debated and passed in Parliament yesterday.

The extra option for employers is due to feedback the Ministry of Manpower has received from firms that were unable to find suitable jobs in their own companies for their older workers, said Manpower Minister Lim Swee Say. Some of the employers want to help these workers secure re-employment with another employer, which could be any company including a sister firm or subsidiary.

With the law amended, it will be legal for companies to transfer their re-employment obligations to another firm, with the worker’s consent required. If the worker disagrees, the original employer has to offer Employment Assistance Payment (EAP) to the worker, if it cannot find a job for him within the company.

After the changes were passed, the MOM, National Trades Union Congress and Singapore National Employers Federation issued updated re-employment guidelines that included the EAP revision. From a recommended range of S$4,500 to S$10,000, the new range is S$5,500 to S$13,000, or 3.5 months’ salary.

Mr Lim said extensive consultations took place before changes were proposed to retirement and re-employment laws. The new re-employment age — which means locals with satisfactory work performance who are medically fit should be offered re-employment until age 67 — will apply to those who turn 65 on or after July 1.

The Government is now studying whether to extend a 3 per cent wage offset to employers that will expire on July 1. The wage offset was introduced in 2015 to encourage employers to voluntarily re-employ employees beyond the current re-employment age of 65. The scheme is on top of the Special Employment Credit of up to 8 per cent for employing Singaporeans aged 55 and above, and it benefits about 120,000 Singaporean employees aged 65 and above each year, said Mr Lim.

Seventeen Members of Parliament took part in the debate yesterday and welcomed the abolishment of the option for employers to cut wages of employees who turn 60.

Some warned of covert prejudice against older workers and questioned if the EAP would be an easy way out for some companies. Ms Cheryl Chan (Fengshan) called for more workers to be equipped with basic knowledge of contracts. Others such as Mr Heng Chee How (Jalan Besar GRC) welcomed the changes but said they were not enough to maximise the working years of mature workers amid disruptions to business models and global trade. Such forces increase the risk of workers being displaced, and a mismatch between skills and the jobs available.

Nominated MPs Randolph Tan and Thomas Chua worried about the extra strain on businesses, while Non-Constituency MP Daniel Goh questioned if the retirement age is “going to be stuck at 62”, and why it took so long to raise the working age to 67.

“How many senior Singaporeans who had wanted to work longer have lost many good working years as a result?” he questioned.

Mr Lim said the tripartite partners hit the wall after raising the retirement age to 62, with employers objecting to a further increase due to the impact on their businesses, and younger workers objecting because they did not want their career progression to be stalled.

So Singapore began looking to Japan and its re-employment age. “When you raise the retirement age, the expectation is ‘same job, same pay’ ... When Japan introduced the idea of re-employment age, the concept is ‘not necessarily the same job, not necessarily the same pay’,” he said, noting that Japan’s re-employment age is still 65.

There are countries with no retirement age such as the United Kingdom and Denmark. There are also countries with a higher retirement age than Singapore, such as Sweden and Finland. But except for Japan and South Korea, their rates of employment of workers in the 65 to 69 age group are lower than Singapore’s rate of 40.4 per cent in 2015.

The tripartite partners are convinced that the re-employment model is the right one, and that Singapore is not progressing too slowly, said Mr Lim.

“At the end of the day here in Singapore, what is our objective? We want to ensure that our economy can continue to grow … we want to support businesses but the main outcome of economic growth must be translated into employment opportunities for people young and old — all inclusive, because (a) job is the best welfare, full employment is the best protection,” he said.