Challenges of Aging Workforce in Singapore - Essay Example

Challenges of Singapore's Aging Workforce By Devangini Mahapatra Chauhan Introduction Aging is an inevitable process filled with various challenges.These challenges come in the form and face of various adversities and weaknesses that an aging person has to confront. In this paper we will seek to understand the dynamics and factors behind the governmental reaction in terms of planning and policies when it comes to dealing with an aging workforce. These issues will be studied in terms of Singapore From polices to strategies to advantages and perspectives, I will aim to produce a plethora of dilemmas and solutions proposed by and for the government and employees alike. The basic crux of this paper lies in the fact that apart from colossal research into problem areas and the options available, Singapore with its increasing aging population needs to choose its best options to make optimum utilization of the elderly without burdening them with taxing jobs. Also, in Singapore, the government and employers need to focus on grouping the elderly and their talents before throwing choices at them. Facts and Figures Source: International Monetary Fund. Finance and Development. It has been believed that Asian countries, with their industrial boom, are busy facing the challenges of financial burdens and over population, where the aging population has a sizable share. In response to this the government and the employers alike have been weighing their possibilities for making use of this as a strength besides offering this segment of people a chance to explore various avenues and gain stability where finances and health care are concerned. The basic trend in Singapore's policy for its aging workforce is a progressive one. The policy implications for this attitude are the society at large as well as employer choices in the basic organizational framework. According to the recent trends, the government has made announcements in its latest budget that it will scale down the contribution rates of workers above 50 years of age so as to accommodate a higher rate of employability of older and low wage workers with a phasing scheme of the contributions to the CPF. Now, the worker earning $50 a month and aged 35 years or older will only pay the full new contribution rate of 13% at a monthly wage of $1,500. (Singapore Budget, 2007) Economic Implications In Singapore, the older low-wage workers are the ones who are affected the most by the changes in the economy owing to the fact that they invariably find it more difficult that most others to learn new skills and upgrade themselves. Apart from this, there is a serious dearth of ways to get re-employed if they lose their jobs where their families do not manage to effectively make ends meet. This has prompted the government to introduce Workfare in the latest budget in order to supplement the wages and savings of older low-wage workers. According to the 2007 Budget, this will also lead to various modifications in the CPF system in order to cater for those options that will complement the Workfare scheme. In this context, it must be pointed out that Singapore is yet to experience the phenomenon called wage supplements despite the fact this concept has been met with ample success in various other countries. For example, the US has developed the Earned Income Tax Credit which negates the level of income tax for low-wage workers. Instead, this act supplements the income actually earned by these people thus giving them more benefits and an impetus to pay taxes or contribute to the Provident Fund. Along the similar lines, the UK has a Working Tax Credit. The schemes provided under this plan have been useful as far as reduction of poverty is concerned, apart from encouraging people to work to show them that they can reach out to the government and the government will certainly reach back to them. For the Singapore government, the implications of these comparisons are many. On the planning boards, the problems in formulating and implementing such plans are clear. To start with, these schemes will be on the expensive side, besides having the potential to weaken the incentive for workers to upgrade themselves as far as new skill sets and even income groups go - when you are getting everything on a silver platter, there is little you will want to do on your own. In lieu of these emerging trends, coupled with the pressing need to consider the design of a scheme, the government has made a careful and safe move, by introducing the Workfare Bonus as part of the Progress Package last year. While this started out simply as a test concept for Singaporeans, the government is now all set to take giant strides by making Workfare income supplements a long-term feature of Singapore's social security system. (Singapore Budget, 2007) In Singapore, there is also a microeconomic dimension to the aging problem. There are various questions revolving around this like when a society ages, how will it meet the financial needs of its elderly Further, there is concern as to whether or not the elderly is dependent on their own accumulated savings, on the support of individual family members, on the general taxpayer, or on payroll contributions from the workforce through government social insurance schemes And if that is not the case, will they be forced to work longer In this regard, the most important question is how the needs of the elderly will be met, since they frequently require either long-term care or substantial medical or social support With an old age dependency ration of 11.8% in 2006, will Singapore be able to keep with all the right policies and programmes (Statistics Singapore) This notwithstanding, the medisave as well as the Comcare benefits offered by the government and the employers alike have been receiving flak lately irrespective of substantial returns for the aging workforce. The reason for this is a 2% leap in the goods and services tax from 5% to 7% in the past year. (Chia, 2007) While this may not be the only side effect, the fact is that the merit is extra contribution towards the Central Provident Fund while the downside is extra burden on tax payers and an increase in tax evaders. In the long run though, this will prove beneficial in some ways for the elderly alongwith schemes for reemployment offered by various organizations in tandem with the government policy of evolving more training programmes. The demerit of these training programmes is that they have not been developed on the best research model which has led to various gaps in the results generated. As regards the medisave policy, there has been recent consensus on the part of the labour movement this year that if workers are to qualify for gaining Workfare, through contribution to the medisave, the contribution should be kept low. In response, the Prime Minister proposed to use Medisave as a criterion for workfare. While Union leaders insist that these rates of contribution are too high, workers whose employers do not contribute to the CPF, are in constant fear of losing their jobs. Apart from this, another challenge according to the government is motivating low wage workers to sign up for this programme. (Kwek, 2007) A fool proof system in this regard is supposed to manage the risks associated with retirement income and medical care. Interestingly, the sheer variety of issues envisaged during the strategizing stage reflects a plethora of differences in national perspective. In this regard, Singapore has had social insurance systems with a coverage that helps the design features in being evaluated in terms of their strength or adequacy where addressing the needs of a future aged population is concerned. (Singapore National Employers Federation) Health Care Systems In Singapore, the rate at which the aging population is growing will lay a steady pressure on the performance of health care systems. Rising incomes and urbanization have already given rise to chronic diseases as cancers, diabetes, and cardiovascular diseases. In effect, the financial burden of treating and managing these illnesses has become heavier. This is due to the fact that the population age structure has shifted along with the rise of globalization which has placed higher demands on expensive modern technologies and drugs. (National Trade Union Congress) In the workplace, health benefits have begun to occupy a place of special importance, especially where those applying to the aging workforce are concerned. According to the Singapore Government's Ministry of Manpower, there are specific acts that have to do with occupational safety and health. These acts are The Occupational Safety and Health Framework as well as the Workplace Safety and Health Act. In essence, these acts aim at reducing all kinds of risks and plying to the needs of elderly people who are engaged in the activities at the workplace by making sure they are not involved in overtly stressful jobs. (Ministry of Manpower) Also, workers have been motivated to make more contributions to their Medisave accounts so as to be able to make use of greater workfare bonuses. (Kewk, 2007) Reemployment Schemes The Singapore Workforce Development Agency has various programs for its aging workforce. Chief among these are the job re-creation program as well as the age friendly environmental practice. (Singapore Workforce Development Agency) In this regard, the Advantage Scheme by the government is one that encourages various companies and organizations to employ the skills and talents of elderly people in their course of daily operations with the aim of reemploying people beyond the age of 62. (Singapore Workforce Agency) Further, there has been a revision in the criteria for workfare benefits by the governments to accommodate it as a permanent feature in the Singapore government's agenda towards creation of more opportunities for reemployment as well as one time cash settlements for over for over 330,000 low wage workers who are in the older bracket. (Kwek, 2007) As far as reemployment pattern in Singapore go, it has been proven that education in this country is of top quality. With a renewed commitment towards scaling even higher heights in this regards, the government has announced in its budget a desire to work towards educating the older people as well to better their chances of getting reemployed. This has come in the wake of the fact that education has become a medium that can be enjoyed by the young and old alike. With a dynamic environment within which people work, there are changes everyday. The only to keeping up with the same is constant training and education. In Singapore, the old are saying "why not", with a renewed vigor to work and earn. This has resulted in the building of programmes as discussed above along with various education plans and the full support of Unions to train these people early on when it comes to being up to date with emerging technologies and trends. While the education profile of the elderly and the accompanying problems for them to adjust to the changing state of the economy as well as the technological arena, employers have begun to respond with impetus from the government. Further, the unions are actually involved in pushing the options available to these set of people by helping in the implementation of these programmes. While there may be constraints of those jobs which cannot achieve much due to more emphasis on the external factors, for example, in banking and other services for which looks, fitness are now a major criteria where presentation is concerned in snagging customers and promotions alike; there are also jobs like writing and other artistic services where these people may come handy owing to the fact that they are now at leisure and peace to simply follow their artistic abilities or hobbies as they do not have to really bother about earning a living. In the final analysis, as far as effective formulation and implementation of reemployment schemes go it is a question of both those finding jobs and those offering jobs which will help in discussing future prospects and adjusting to the current workplaces and a new drift of life as compared to the previous work experience that the older person may have enjoyed. In this regard, it has been realized that only over time will the scenario present itself in more precise terms as far as trends, experiences will have shaped things for the tripartite parties. This is apparent in the latest budget speech on Workfare which is meant to make especially the lower income group stay in employment until as long as they can or as long as they want to. Conclusion While it has been recognized that there is a greater need for the government to indulge in reviews and studies in order to find better plans for the Central Provident Fund facilities, there is also on emphasis on finding a combination of all the right factors through which elderly people will be able to make the best of their time in their old age. In conclusion, it may be said that Singapore's preparedness for an aging population is quite clear. Singapore has continued to pursue those policies which support a rapid income growth. The government believes that this strategy will increase the proportion of the income available to finance higher living standards at a time when the population is become increasingly aged. Also, there is a visible change in the government's policies to accommodate more elderly people where health care, reemployment and training is concerned, so as to offer them a more enriched old age. The trends followed in Singapore as regards the policy and framework employed by the government and employers as well as considerations in the formulation of the same, point towards a progressive pattern where health care, economic benefits and reemployment schemes enjoy equal importance instead of depriving elderly people. Apart from economic and other implications, the challenges faced also have to do with medical benefits that will offer stability and yet not become a burden when contributing to the Central Provident Fund, which is chiefly responsible for taking care of the aging population. References: 1. Ministry of Manpower - MOM. URL: http://www.mom.gov.sg/publish/momportal/en/communities/workplace_standards/good_employment_practices/case_studies/case_studies_on_age-friendly.html#career (Accessed on: 16th January, 2007) 2. Chia, Sue - Ann (January 2007). Ongoing Review to help grow CPF Nest Egg. The Strait Times. 3. Singapore National Employers Federation. URL: www.snef.org.sg (Accessed on: 16th January, 2007) 4. Singapore National Budget, 2006. URL: http://www.mof.gov.sg/budget_2006/budget_speech/header2.html (Accessed on: 29th January, 2007) 5. Statistics Singapore. URL: http://www.mof.gov.sg/budget_2006/budget_speech/header2.html (Accessed on: 27th January, 2007) 6. Kewk, Ken (January, 2007). Workforce Likely to Depend on Medisave Deposit. The Strait Times. 7. National Trade Union Congress - NTUC. URL: www.ntuc.org.sg (Accessed on: 16th January, 2007) 8. Singapore Workforce Development Authority - WDA. URL: www.wda.gov.sg (Accessed on: 16th January, 2007) 9. Peter S Heller. Asia, Ready or Not. Finance and Development. Volume 43, Number 3. International Monetary Fund. September, 2006 10. Kewk, Ken (February, 2007). Call to Keep Medisave Rate Lowfor Workfare. The Strait Times. 11. Singapore Budget, 2007. Restructuring the CPF and Introducing Workfare for Low-Wage Workers. URL: http://www.singaporebudget.gov.sg/budget_2007/budget_speech/section14.html (Accessed on: 18th February, 2007) Read More