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Proposed Mandatory Minimum Retirement Age for the Private Sector

The Government is proposing to introduce a mandatory minimum retirement age for employees in the private sector through legislation. The Government's justification in enforcing a mandatory minimum retirement age are as follows:

  • There is a rise in the average life expectancy to 75 years and a growing ageing population currently at 7.8% and ex-pected to attain 15% by 2030;
  • Inadequate EPF savings as 75% of EPF members have savings of less than RM50,000 upon attaining the age of 54 years;
  • To strengthen the social safety net for workers especially the vulnerable groups;
  • To be at par with other countries in the region that have a retirement age of 60 years and above;
  • To reduce the burden on the Government in providing medical and welfare aid to the aged community;
  • To ensure equal opportunities in jobs irrespective of age; and
  • To strengthen the pool of quality manpower by extending the services of skilled and experienced workers.

FMM is strongly of the view that employers should be given the flexibility to decide on the retirement age that is most appropriate to their organisation.There should not be a mandatory minimum retirement age. There should also not be a legislation on the mandatory minimum retirement age. Extending retirement age could only be considered when the present rigid and inequitable laws on the hiring and firing of workers have been amended.

The nature of work in the private sector, especially in the manufacturing sector is such that companies cannot compro-mise on productivity and efficiency of their workforce. Remaining productive and competitive is crucial in ensuring the survival of companies and the growth of the economy. Companies should be allowed to continue with their current practice of extending the service of workers who are productive, fit and having satisfactory work performance on a voluntary basis.

Increasing the retirement age would also mean lower promotion opportunities for younger workers and might pose difficulties in securing jobs, thus increasing the unemployment rate. As an alternative to protect the jobs for the younger generation, employers can offer work either on a contract, part-time or project basis to retirees who still have interest and are able to continue working and contribute productively.

In ensuring a more balanced recommendation, there should be a thorough study to review the impact of increasing retirement age on the private sector in particular costs factors like extended medical benefits, EPF, SOCSO and HRDF contributions.

FMM submitted a full paper highlighting its concerns and recommendations to the Secretary General of Ministry of Human Resources on July 15, 2011. A subsequent joint letter with the Malaysian International Chambers of Com-merce & Industry (MICCI), the American Malaysian Chamber of Commerce (AMCHAM), and the Japanese Chamber of Trade and Industry Malaysia (JACTIM) was submitted to YAB Prime Minister on October 4, 2011.

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