Manufacturers want mandatory re-employment instead of retirement age at 60
KUALA LUMPUR, June 14 — A majority of manufacturers want the compulsory retirement age for the private sector to be kept at 55, but have proposed mandatory re-employment to raise the working age.
Putrajaya proposed yesterday to make 60 years the earliest retirement age for the private sector, in another concession to workers following the recent wage floor and revival of studies into unemployment benefits.
But the Federation of Malaysian Manufacturers (FMM) said today many its members “preferred” that the retirement age be kept at 55 and that mandatory re-employment would be a much more “flexible” arrangement.
FMM president Tan Sri Yong Poh Kon (picture) said this was based on findings of the federation’s survey with the Malaysian Institute of Economic Research (MIER) titled “FMM-MIER Business Conditions Index”, which polled 386 FMM members nationwide.
The survey states that 51.5 per cent of respondents did not want an increase in the mandatory retirement age, while only 20 per cent would like it to be raised to 60.
“More than half of this group would be willing to raise the working age through mandatory re-employment at not less than 60 per cent of the last-drawn salary,” Yong told reporters.
He told The Malaysian Insider later that mandatory re-employment would be a preferred arrangement for manufacturers as they would have the option to keep hiring skilled workers who have reached the age of 55.
“Now if it’s extended to 60, even the under-performing employees will have to be kept. It’s not so easy to fire people in Malaysia,” Yong lamented.
The Minimum Retirement Age Bill, tabled by Human Resource Minister Datuk Seri Dr S. Subramaniam yesterday, will supersede any previous retirement age agreed to between employers and employees if passed into law.
However, the Bill allows for an employee to opt for early retirement if such a clause exists in the employment contract.
The government will also be able to gazette a higher minimum retirement age if necessary. The private sector retirement age is part of a slew of promises by the Najib administration aimed at courting the working class.
The Barisan Nasional (BN) government has also acquiesced to labour unions in government-linked corporation, notably unwinding the controversial Malaysia Airlines-AirAsia share swap.
It has in recent days also revived plans to introduce unemployment insurance (UI).
But these moves have angered employers, especially small-medium enterprises (SME), who say they will be pushed to the brink by added labour costs from the impending introduction of the wage floor even as the global economy stutters.
The Malaysian Insider learnt that Putrajaya has completed consultations with stakeholders at local and national levels last month for the UI, with a proposed contribution from the government and employers each doubling what employees fork out.
“The UI is for those retrenched after confirmation. There has been a proposal that those confirmed after three months of work be compensated for up to 24 months,” a source told The Malaysian Insider.
SMEs, already complaining of crippling wage bills that will come with the minimum wage policy announced on Labour Day, are questioning the need for more compulsory labour costs.
These firms make up 99 per cent of operational companies and employ 59 per cent of the labour force, or seven million workers. They are the most labour-intensive, with 15 per cent of manufacturing costs coming from human resource.
The Human Resources Ministry insisted yesterday it will continue to look into UI despite reports that Putrajaya will shelve the plan until minimum wage is fully enforced.
Several manufacturing associations told The Malaysian Insider recently they are already “cautious” and looking to “consolidate rather than expand” over the next 18 months without added pressure on their balance sheets from contributions to UI.
Headwinds from the euro zone crisis and a cooling Chinese economy have hit Malaysian exports, slowing growth to 4.7 per cent for the first three months of the year, the third consecutive quarterly drop since Q2 2011.