I REFER to last Saturday's editorial, 'Pay cut at 60 a relic to be discarded'.

The Retirement Age Act allows employers to cut wages of workers reaching age 60 by up to 10 per cent. A key concern raised at the National Trades Union Congress (NTUC) Ordinary Delegates Conference last week was that some employers implement the full 10 per cent wage cut automatically without regard to the company's wage structure and workers' job scope, productivity and performance.

The wage cut was incorporated in the Retirement Age Act at a time when wages were predominantly seniority-based, to help older workers be more competitive and employable. Since the Act came into effect in 1999, the tripartite partners have mounted concerted efforts to move companies progressively from a seniority-based to a performance-based wage system.

Union delegates felt that as wages become more reflective of job values, there is less reason to automatically cut wages by 10 per cent when workers reach 60. In fact, among unionised companies, less than 10 per cent make the full 10 per cent wage cut and 20 per cent make no cut at all.

Even so, the labour movement has not called for a repeal of the wage cut provision in the law because we recognise that not all companies have fully adopted a performance-based wage system.

As expressed by NTUC secretary- general Lim Swee Say at the media briefing last Thursday, the labour movement is seeking a review of the practice.

It calls on each individual company to examine the justification for a wage cut, taking into account the wage structure in the company, as well as the job scope, productivity and performance of its workers. Even if a wage cut is justifiable, it need not be the full 10 per cent as we continue to progress towards a performance-based wage system.

The labour movement will work closely with the tripartite partners to find a pro-business and pro-worker way forward.

As Mr Lim said at the media briefing, 'the tripartite partners work on a basis of consensus. We highlight the issue, we build consensus, then we think of ways to implement the consensus'.

Heng Chee How
Deputy Secretary-General,
National Trades Union Congress
Chairman,
NTUC Re-employment Expert Group

This article was first published in The Straits Times.