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THE National Trades Union Congress (NTUC) is being socially progressive, not the least bit hostile to business, in seeking to remove employers' lawful option of cutting pay by up to 10 per cent at age 60. Although a gentleman, NTUC chief Lim Swee Say did not have to be even mildly apologetic when explaining to a labour conference his feelings on the matter. He had justice on his side. 'We are not declaring war,' he said, 'but something ought to be done.' That 'something' should be a repeal of that section of the Retirement Age Act which inadvertently has tilted power too much in favour of employers, in deciding just compensation for older workers. It is reasonable to hear the employers' side of the cost story first, when the NTUC raises the issue at tripartite level with government and employer representatives. Businesses will undoubtedly resist, but they will have to justify continuance of what is increasingly an impediment to social justice.
The wage-cut privilege has evolved into an anachronism over the years, as nearly all employers now measure reward by job scope and performance. Seniority is no longer the factor it used to be, a development Mr Lim noted in the narrowing of the wage ratio between older and younger workers.
Employers were granted the option a decade ago to ease their cost burden as the retirement age was raised progressively from 60 to the prevailing 62 years. The ultimate bar is 67. While the wording of the Act placed an onus on companies to be judicious when reducing wages at age 60, the option was in practice embraced fully and with alacrity. A worker's performance and duties were to be considered besides his age; the quantum of the cut could be less, but up to a maximum of 10 per cent; and cuts could be made at any time after age 60, even at 61, and not necessarily smack on a 60th birthday. It probably was too much to expect many bosses to be charitable. They could not be blamed entirely for taking the maximum allowance: The law allowed it.
Now the law should disallow it. It is timely to eliminate an anomaly that could clash with the state's campaign to keep older workers longer in harness. Employers have other means of managing the cost of holding older staff. The Government is ever attentive to their need to be competitive. It also is attentive to the needs of the working population, but might the balance have gone out of kilter? Workers already absorb progressive cuts in the employers' CPF contribution rate after age 50. Those aged above 60 receive 5 per cent, a two-thirds reduction from the top rate. That's quite a difference.
This article was first published in The Straits Times.
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