End pay cuts for older workers who do same job

Is it fair to cut the pay of older workers who are re-hired at the age of 62 if they continue to do the same jobs?

The question was thrust into the spotlight this week by the National Trades Union Congress.

Since January last year, employers are required by law to re-hire staff who turn 62 if the worker is physically fit and has satisfactory work performance. However, the law is silent on pay, leaving it to bosses and workers to negotiate.

This is where it gets complicated.

The NTUC released a survey which showed that eight in 10 unionised firms in the private sector did not cut the pay of their workers when re-employing them at age 62.

In contrast, public servants face pay cuts of up to 30 per cent when they are re-employed. The extent of pay cut depends on a formula that the Public Service Division (PSD) has drawn up. The NTUC wants the formula reviewed.

Older workers in the private sector appear to be better off than public servants.

The disparity is puzzling, considering that the re-employment of retiring public servants started with so much promise in November 2010. Then, the PSD announced that the public sector would implement re-employment guidelines from July 2011, six months ahead of the national law on it.

A PSD director touted it as a win-win situation, saying: "Officers will be able to remain economically productive and be meaningfully engaged in their golden years while the Public Service will continue to benefit from the wealth of institutional knowledge and experience that these older officers bring with them."

For all the talk about valuing institutional knowledge and experience, one can only wonder how the retiring officers felt when they were told they could continue to work, but at lower pay.

But should we even be bothered at all? After all, pay is a personal matter between the retiring official and the public sector. And surely a cheaper public official means savings to taxpayers too.

There are three reasons why we ought to care about this.

First, it is plainly unfair to ask a worker to do the same work at lower pay. Cutting pay on the basis of age smacks of ageism. It also flies in the face of meritocracy where remuneration and rewards are justifiably based on performance and merit, not age.

The second reason is that a pay cut can affect the morale of the public servants, both those contemplating re-employment and others near retirement. That might lower the standard of public service.

The third reason is that if other bosses follow suit, soon more seniors will have their pay cut as well. The public sector is the largest employer in Singapore and it is no secret that other companies follow in its footsteps.

The new re-employment law kicked in last January yet the ageist practice of cutting pay for the same work has already seeped in. It has to be reined in now. If left unbridled, it will erode the effectiveness of the law and older workers will be worse off.

On Tuesday, Deputy Prime Minister Teo Chee Hean said that the public service has cast a wide net to attract diverse talents, so that its ranks comprise people with different backgrounds, skills and experiences.

Although Mr Teo, who is the minister in charge of the civil service, was addressing young government scholarship recipients who will be joining the public sector as fresh recruits after they graduate, his remarks will not be out of place at the other end of the spectrum - in relation to retiring officers. Put simply, the public sector will be less diverse if it loses its experienced officers.

PSD said that some 1,500 public officers were offered re-employment between July 2011 and December last year when they retired at age of 62. They make up about one per cent of the 136,000-strong public sector.

Of the current resident labour force of 2.12 million, some 215,000, or about 10 per cent, are above the age of 60.

The ratio of seniors in the public sector is therefore already out of step with that in the rest of the labour force. Cutting the pay of older public servants will encourage some to stop working, and further widen the gap.

It is clearly unfair to cut the pay of older workers who are rehired at the age of 62 if they continue to do the same jobs. And the first step to fixing it is to review the pay cut formula.

If we truly value older workers, then it seems to me this formula should be ditched.


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