Wage subsidy for re-hiring older workers in Singapore extended to 2017

Singapore's Ministry of Manpower (MOM) has announced wage support for bosses hiring older workers will be extended till 2017, when the new re-employment age of 67 comes into effect.

According to the statement, the Government has already paid out over $22 million to more than 49,000 employers who employed about 110,000 older Singaporeans aged 65 years and above, for work done in the first half of 2015.

The raising of the re-employment age from 65 to 67 was announced by Prime Minister Lee Hsien Loong at this year's National Day Rally, with the objective of providing more opportunities for healthy older workers who want to continue working.

MOM's statement clarified that the tripartite partners are currently in discussion on the effective date of the new re-employment age of 67.

"In the meantime, employers are encouraged to continue to re-employ older Singaporeans aged 65 and above," it added.

To encourage employers to do so, the Government had during Budget 2015, introduced an additional wage offset of up to 3% of wages for one year to encourage employers to hire such workers earning up to $4,000 a month in 2015.

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An earlier statement by the MOM had explained the extent of the wage offsets.

The programme will allow bosses to receive wage support when mature workers, who have been looking for jobs for at least six months, are employed in mid-level jobs that pay $4,000.

Wage support rates will be divided into two categories and will be provided for a year with different subsidy rates in the first and second half.

The first of the two categories will cover PMEs aged between 40 and 50. For them, WDA will provide a 20% subsidy of gross monthly salary, capped at $1,400 a month for the first six months.

For the next six months, employers will receive a subsidy of 10% of gross monthly salary, capped at $700 a month.

The second category covers PMEs aged 50 and above, which will see employers receiving subsidies of 40% of gross monthly salary, capped at $2800 per month for the first half year and 20% of gross monthly salary, capped at $1,400 per month for the remaining half.

Human Resources reached out to HR experts to find out how the wage subsidy impacts the hiring of older workers.

Jassy Tan, divisional director of human resources for FJ Benjamin (Singapore) felt that the impact of the wage offset is dependent on the industry and workforce composition.

"For companies that are not already employing older workers, the 3% wage offset is small and unlikely to impact decision making.  Conversely, for companies that are already employing large number of older workers (eg McDonalds), this wage offset will definitely help to defray some of the operational cost," she explained.

She added: "Generally and otherwise, the wage offset is more of an enabler to mindset change."

While the wage offset might help change the mindset of employers,  what would happen after the government pulls the plug on this policy?

Tan is of the opinion that if the employers need the older worker, they will continue to hire them. At the same time, since the government is extending the wage offset until the new re-employment age of 67 comes into effect, employers will be legally bound to re-employ older workers till the age of 67.

"It’s been a slow but progressive journey.  There have been schemes like WorkPro to help encourage employers to retain their mature workers.

"The greying demographics (ie aging workforce, more affluent society and success in our education system) has hastened the mindset change to progress more into hiring mature workers as an alternative to augment the workforce."

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