UMNO MP and de facto law minister Azalina Othman has been an avid advocate for the extension of mandatory retirement age to 65; but will such a drastic jump be the right move?
The recent announcement by the government regarding plans to increase the mandatory retirement age from 60 to 65 is sure to have sparked heated conversations around the country, not just among the seniors - but also the younger generation!
The proposal is said to be part of the current government’s efforts to “future-proof” the country's workforce and social systems as it prepares to address the challenges of a rapidly ageing population and significant demographic shifts.
For context, last Thursday (July 31), when tabling the 13th Malaysia Plan , Prime Minister Anwar Ibrahim himself had reaffirmed that the mandatory age for retirement will be reviewed, with the country's statistics department having revealed that over 17% of the population were expected to be aged 60 or above in 2040!
Providing financial support while promoting healthy, active ageing?
In fact, last May, Azalina had reportedly suggested that such a move would better reflect current realities in light of the increased life expectancy of the people here.
However, as expected, the proposal had encountered resistance from groups such as the Malaysian Youth Council, which argued that the policy is not suitable for Malaysia’s current labour market dynamics.
So then, it may not be everyone’s cup of tea?
Truth be told, though the move may appear to be noble it does come with a long list of pros and cons, along with a plethora of challenges - and may not be palatable to everyone!
As such, many may feel the need for the proposal to be studied more holistically given its wide-ranging impact not only on the older ones but also the younger segments in the workforce whose interests and concerns must be factored in as they represent the future of the country.
Do the pros outweigh the cons?
Significantly, the main advantage of increasing the retirement age is that it will enable people to increase their savings in the Employees Provident Fund; this, of course, will ensure that they have a bigger nest egg, and with that, more funds to sustain their lives through their twilight years without having to depend on the state or burdening their family members.
On the other hand, critics may also contend: wouldn't retaining the older generation in the workplace also fuel unhappiness among the younger ones? After all, won't their promotion and career advancement prospects be put on ice as they are forced to sit out and wait impatiently for the seniors to retire?
In such circumstances, won't it have a negative impact on their morale and productivity, and compel more to join the already long exodus in seeking jobs overseas, especially in places like Singapore?
Inadvertently, would we be sacrificing our youths just to sustain the older workforce?
In fact, if more seniors are made to stay put in their jobs wouldn't it result in fewer job vacancies for the younger workers? How would the government address this?
Interestingly, the Malaysian Employers Federation had reportedly cautioned that extending the retirement age to 65 is bound to heighten the rate of youth unemployment and lead to a decrease in human capital in the future.
In view of this, some experts have advocated for staggered adjustments like what Singapore was said to have done i.e. by increasing the retirement age from 60 to 62 first - instead of a drastic jump to 65!
So shouldn't Malaysia think through the proposal carefully?
Meanwhile, given the country's already bloated civil service, won't retaining the older staff only place further strain on the government’s tight cashflow?
Likewise, won't employers in the private sector also be plagued with serious concerns about bearing the higher cost of employing older workers, in terms of salaries, gratuity payments and medical bills as well as the spike in insurance premiums for hospitalisation benefits?
To exacerbate matters, with advancing age, won't they be more prone to physical and mental health issues which may be compounded by working longer hours?
In spite of all the benefits, the reality is that, with the exception of perhaps, politicians, not everyone may want to work well past 60!
While PMX and Azalina should be lauded for attempting to tackle the emerging crisis head-on instead of kicking the can down the road, the burning question here would be: can future governments afford to fork out the mammoth sum required to sustain the burgeoning civil service workforce?
In conclusion, while economists appear divided over this issue, shouldn't the Madani administration also simultaneously explore and adopt other “alternative models", perhaps, drawing on the experiences of Singapore and Japan to assist our ageing population? Something more balanced, as long as it doesn't leave a “black hole” in the country's finances?
Main information source: FMT, HRM Asia, Malay Mail and The Edge Malaysia.
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