- 6 months ago
- #considerthis
In recent weeks, a proposal by Minister Azalina Othman Said to raise Malaysia’s retirement age from 60 to 65 has reignited national debate. While the Prime Minister himself has called for a careful study of the idea, the backlash online was swift—with many Malaysians, voicing fears about youth career progression, delayed rest, and government motives. But behind the outrage lies a real policy dilemma: Malaysia is ageing rapidly, set to become an aged nation in fifteen years. What would raising the retirement age actually mean for Malaysian society, and how should such a policy be designed for fairness, dignity, and choice? On this episode of #ConsiderThis Melisa Idris speaks with Chai Sen Tyng, Senior Research Officer at UPM’s Malaysian Research Institute on Ageing (MyAgeing).
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00:00Hello and good evening. I'm Melissa Idris. Welcome to Consider This. This is the show
00:15where we want you to consider and then reconsider what you know of the news of the day. In recent
00:20weeks, a proposal by Minister Azalina Uthman Said to raise Malaysia's retirement age from
00:2660 to 65 has reignited national debate. While the Prime Minister himself has called for a careful
00:33study of the idea, the backlash online was swift, with many Malaysians voicing fears about
00:41youth career progression and delayed rest for those past 60, as well as questioning government
00:50motives. But behind that real outrage is a real policy dilemma. Malaysia is ageing rapidly.
01:00We are set to become an aged nation in 15 years. So today we're going to go behind the headlines
01:06and ask what raising the retirement age could actually mean for Malaysian society. And if
01:14we do implement such a policy, how should it be designed with fairness, dignity and choice
01:20at the centre of it. So joining me on the show now is Chai Sentheng, who is a senior research
01:26officer at UPM's Malaysia Research Institute on Aging, better known as MyAging. Chai, welcome
01:32to the show. Thank you so much for joining me today. Before we get into the kind of current
01:36discourse around raising the retirement age, I'm hoping that you can help us first think
01:41through what the social purpose of retirement is. What do you think the retirement age was
01:50actually meant to achieve in society?
01:52Thank you, Melissa. I think this is really what we consider a cyclical issue. I mean, it
01:59comes up all the time, from time to time. And the response is pretty predictable by now.
02:07But it's a good place to start, as we like to figure out, you know, where does all this
02:11retirement nonsense came from, right? I mean, there's really no retirement age before what
02:17we call formal sector economies. I mean, even in less developed countries, they have a very
02:23high labour force participation rate for senior citizens, simply because when you are in agricultural
02:29sector, or you are in the informal sector, you don't really have a retirement age. And in fact,
02:36that's the interesting part about our country. The Employment Act actually does not specify
02:42a retirement age, actually. So that's the reason why the Minimum Retirement Age Act, when it
02:49was introduced in 2012, spells out clearly that it is a minimum, not a maximum or a mandatory
02:57kind of requirement. So it means that the whole purpose is actually to make sure that our employers
03:04keep their workers around, at least to the age of 60. Of course, personal preferences and health
03:12notwithstanding, you can quit anytime you like, nobody's stopping you from that. And since we did
03:19not manage to harmonise EPF withdrawal ages with retirement age, you can still withdraw all your
03:25savings at the age of 55. So I think before we proceed any further, it's very useful to understand
03:34where does this policies come from and the purpose. And unfortunately, rather, although we actually set the
03:43minimum retirement age to be 60 years old in 2012, the percentage of workforce, you know, the older
03:53persons or older workers in the workforce has remained stagnant, the impact of the law back in 2012, probably
04:00added less than 10 percentage points. So let's say, for example, before 2012, the labor force participation
04:09rate of those age 55 to 59 is about, say, maybe 12-15%. And today, it's actually no more than 20% as well. So it's,
04:21it didn't really significantly increase, you know, it's not like when the government introduced a new
04:26threshold, the labor force participation rate of older workers doubled or tripled, you know, it did not
04:33happen. Right. Is that, is that largely because older workers themselves do not want to stay employed
04:41longer? I'm just wondering where this debate is coming from, in terms of the retirement age, I'm just wondering
04:49whether this is really driven by fiscal sustainability, you know, economic planners
04:55are thinking about this rather than individuals. I think maybe if they are talking about the civil
05:00service, probably, but it's not a sure estimation, because when you keep them longer in the civil
05:07service, because the way the pension, the civil service pension is calculated, is based on last drawn
05:12salaries. So if you give them another five years, you know, that, that pension burden might go up. So I,
05:18I'm, I think that one is a separate argument. But in terms of fiscal policy, for private sector workers,
05:26at least, since we didn't do any adjustments to EPF, I do not believe there's actually any fiscal burden on
05:34the government for pensions and also for the private sector. So the only thing really it could be is the
05:41linkages to social welfare benefits, social welfare, and also what we call concessions in the market,
05:48probably like, for example, eligibility for Bantuan Warga Emas, the cash transfer programs,
05:54you know, maybe the threshold might be moved to 65, you know, or if we are going to introduce
06:00some schemes, you know, SARA or any of the sumbangan asas tunai rahma whatsoever, maybe the senior
06:07citizen definition will then be moved to 65. So, Chai, how are you interpreting that data? When you said
06:15that there's really no big difference in the labour force participation of those over 50, how are you
06:23interpreting those figures? I think the the good news of the 2012 law was that it stopped the decline
06:32because previously the data trend kept showing that the labour force partition rate of older persons
06:38keep falling steadily in the past two to three decades. That's expected because our previous retirement age
06:45was 55 and a lot of company did not follow suit when the government set the mandatory retirement age for
06:52civil servants at 60, hence the reason for the enactment. But what happened we noticed is that,
06:59you know, our employers and employees, both sides are really not entirely keen, maybe because there's
07:06high turnover in the market, there is a steady flow of foreign and younger workers entering the labour market.
07:15But statistically speaking, from a demographic point of view, the population under 18 or under 20
07:22rather has been declining. And that's a fact, you know, the number is actually shrinking. If the younger ages
07:29you go, the greater the decrease. And that is why in countries like Korea and Japan, on an annual basis,
07:39they keep announcing that there are schools that have zero new enrolments. You know, we are not at that
07:44stage yet, of course, but it is declining. So you can say that from a demographic view, the number of younger
07:53workers entering the workforce is declining, maybe delayed also because there are better educational
08:00opportunities. You know, the peak used to be 20 to 25. The peak now is 25 to 29 because maybe everyone has a
08:09chance to go to university. So their delay of entry into the workforce is also expected. So I believe
08:16these are the factors, these are the considerations. So I think that's where we are at now.
08:21All right. So if the government is studying this matter of raising the retirement ceiling,
08:28what guardrails do you think needs to be in place to not just protect the wellbeing of workers across the
08:37lifespan? But also you mentioned earlier, it seems that employers, both employers and employees,
08:42don't seem to be too keen on it. So how do we make sure that this is a well-designed policy?
08:49Yeah, I think that's where the policy options come in. It's not just increasing the retirement age
08:56indefinitely. The last time we did it was in 2012, right? I mean, if we study the impact and the outcome,
09:02we realized that there's still some stumbling block, you know, in terms of getting more elderly to stay
09:07in the workforce. So rather than trying to increase the retirement age again, maybe we can have something
09:14like what we call the Reemployment Act, you know, or something what we say as a gradual retirement or
09:21phase retirement. And that was being proposed by ISIS as well. So I think Singapore has done it. I mean,
09:27Japan has done it. The whole idea here is to get both the workers and the employers get used to this idea
09:34that, you know, I don't wake up at the age of 60 and then turn into a totally different person, right?
09:39I mean, I don't go into my birthday and I wake up tomorrow at a whole new threshold. I suddenly lost the ability
09:44to walk or lost the ability to work. So this is the idea here, you know, that trying to keep them in the
09:52job market. But at the same time, addressing problems that cause their inability to perform
09:58in later ages, you know, once you reach the age of 40 or 50, a lot of older adult workers lose the
10:05opportunity for training, reskilling, upskilling, and a lot of scholarships and also training opportunities
10:11are denied to them. And then at the same time, we said, oh, these older workers, you know, they cannot
10:15catch up or whatsoever. So overseas, they have these terms called multi-generational workforce. How do you
10:21get, you know, as the workforce gets a little bit longer in retirement ages, people live longer?
10:28How do we make sure that, you know, there's these gaps between the generations can be addressed?
10:32And how do we make sure that everyone gets the opportunity to catch up, you know, and if they
10:37can and if they are able? So I would say that, yes, we don't have to keep going the increasing the
10:43mandatory or minimum retirement age route, we can do what we call a re-employment act, give better
10:50training opportunities to older workers. I think these are the key things that can be done, yeah.
10:57Can I get you to expand on that? Why would a re-employment act be a better option than
11:07raising the retirement age? What are the pros and cons of going one way or the other?
11:13Yeah, I think the whole idea of re-employment act, especially the one that was implemented in
11:19Singapore takes a tripartite approach. You know, they have this committee where they actually discuss,
11:27you know, the basic idea of a re-employment act is that when you reach the age of retirement,
11:32let's say 60, your current employer has an obligation to offer you some position, you know,
11:40it might be a different job, different pay, and you might have to, you're given a chance to actually
11:47stay in the same company, maybe in a different position, maybe at a different pay scale. But this
11:54is something that has to be done, you know, in a first basis. The worker can refuse, they can say,
12:00oh, no, I had enough, you know, I just want to retire. And we can allow that, there's no issue here.
12:06But the committee works in a way that they try and see what industry is suitable for this kind of
12:12re-employment arrangement. Because not all industry will be able to fulfill this kind of re-employment,
12:19a gradual or phased retirement. And it also prevents some employers from low-balling their workers.
12:28You know, maybe they want them, but just because there's a re-employment act, they actually try to
12:33make them work at a much lower pay. So these are some of the considerations that we can have.
12:39Yeah, fantastic. Would that work for both private sector and the civil service and public sector as well?
12:46This is the trick. I'm not too sure flexi work works very well for public sector. I have yet
12:54to see whether the contractual, I mean, we have that in a civil service, we call it contracts after
13:00your retirement. But I think the bigger debate with civil servants is actually to make sure that if you
13:07accept some of these job contracts, your pension, would it run in parallel, then technically you're drawing
13:15two salaries, right? I mean, so these are the more nuanced details that has to be discussed,
13:20I mean, alongside with private sector pension reforms. I mean, the days of getting a lump sum payout
13:27is also over, I think, because it just paints a very big target on the back of our retirees.
13:32So everybody knows at the age of 55, you're going to be coming to money and then you don't even have
13:39an incentive to work anymore because we didn't align these differences. So I think, yes, we need more
13:46discussions on these issues. But at the same time, we also need a more open and tolerance in listening
13:53and accepting ideas because Malaysians are notorious for, I don't want that. And then they immediately
13:59jump to the other end and say, why are you doing this? But I think we can and we should discuss it
14:04because it's all in the benefit of the workers. And also, we must not victimize the employers who might
14:11genuinely feel that, why should I be saddled with this older worker for another five years or three
14:16years or whatsoever. But let's look at it this way. If our employment is purely based on performance,
14:24based on productivity, then it's not issue about seniority, right? So I think the elderly themselves
14:30would feel relief that I still want to work, but maybe I don't want nine to five and over time,
14:37and I want to take a more laid back approach. This is where organizations can think about,
14:42how can I reposition this asset and see how we can best use, best make use of his experience and
14:51abilities. Chai, thank you so much for giving us something to consider, then reconsider. I appreciate
14:57your time. Chai, same thing there from MyAging at UPM. We're going to take a quick break here on
15:03consider this. We'll be back with more on this topic. Stay tuned.
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