Wages of older workers

This letter appears in the Online Forum of the Straits Times on 24 May 2010.

I refer to the letter entitled “Less than 3% of private firms cut older worker’s wages” (ST 20 May) sent in jointly by the Singapore National Employer’s Federation, Ministry of Manpower and the National Trades Union Congress.

Employers in Singapore have the flexibility to terminate an older worker for a variety of reasons, including restructuring and outsourcing. This has been practiced quite often in the private and public sectors. There is little need for them to keep workers until age 60 to have their wages reduced under the Retirement Age Act. This probably account for the low percentage of employers exercising this wage cut.

I cite the case of a friend who has worked for 11 years in regional business development for a local insurance company. He was rated as a good performer by the previous management. Recently, with a change of top management, he was asked to leave and was offered a compensation of only 3 months of salary.

He asked for my assistance on how to make an appeal to the Ministry of Manpower, as he still has a family and an sick elderly mother to support.

I hope that our tripartite partners will recognise this type of difficulty faced by many Singaporeans. The current employment practices offer little protection to workers, especially those at the older wages, when the top management outsource the work to contractors to reduce their cost or replace senior people with their own buddies.

It is time for Singapore to consider a minimum wage so that the wages of our worker do not continue to stagnate due to outsourcing to contractors who can employ foreign workers at lower cost. There is also a need to set a certain level of retrenchment benefit for all workers, including managers, to protect them against being replaced for reasons that are not related to bad performance.

Tan Kin Lian