By Joachim Ng
Ipoh is proud of its Concubine Lane, but the day is coming when a Beggar Lane will emerge next to it if we fail to extend the retirement age to 75. Beggar Lane will in all probability become a new city landmark from Penang to Johor Bahru.
Paving the way for Beggar Lane is the expedient decision to allow young EPF contributors to withdraw up to RM12,000 of their savings. More than half of the 7.5 million EPF members have only RM40,000 or less in their accounts.
If you withdraw RM10,000 out of the RM40,000 that you have, you will be left with just RM30,000. If you are aged 40, you have only 20 more years of working life before you are terminated.
Upon retirement, you will have less than RM150,000 in EPF. The most you will get in dividends is RM7,500 annually or RM625 a month. Can you pay your house rent, electricity bill, food bill, and other bills with this amount? What if you eat into your savings at RM1,500 a month? In 10 years, it will all be gone. But you have another ten years to live, and what if you survive beyond age 80?
One in ten Malaysians is aged 60 and above. Without a job after age 60, there is only one place for the majority of them — Beggar Lane. Expressing sympathy, a minister in the Prime Minister’s Department (Economic Affairs), Dauk Seri Mustapa Mohamed believes it is necessary for Malaysians to work until 65.
But that’s not good enough. You have to work until 75 to avoid dying as a beggar. Are you still productive beyond age 65? Yes, very productive. In fact, senior workers have a cutting edge that makes them superior to young workers in most occupations.
Senior workers have loyalty, experience, honed skills, maturity of thinking, empathy, patience, friendliness, and a sense of customer requirements. They are committed to staying on the job instead of hopping, and unlike younger workers they don’t look for excuses to take medical leave.
It is this comparative advantage that all companies and the civil service should exploit. Instead of retiring them, deploy seniors as trainers, coaches, and mentors to upgrade the skills and productivity of young workers. Seniors are particularly useful in customer relations and counter service, as well as customer needs analysis and strategic planning.
There are, of course, areas where youngsters outperform the seniors. Youngsters are good in rough jobs, and in the civil service you need youngsters for outdoor patrolling and law enforcement.
Are seniors poor in digital technology? You’ll be surprised at how good they can be if given technical training. Economic planners strike out the seniors without realising that throughout history, some of the greatest innovators were old people. America is going to have a 78-year-old as its President next year. Once you immerse an oldster in a technological learning environment, he will catch on unless his brain is slow.
When you keep seniors, you are not closing the door to youthful recruitment. Nor are you denying promotion opportunities for the next in line. To think this way means that you have a “tiger vs crocodile” river battle mentality. The young are the roaring tigers, and the old are the half-blind crocodiles.
The World Bank in its report, “A Silver Lining: Productive and Inclusive Aging for Malaysia” published on November 24 this year stated that there is no evidence that employment prospects of younger workers are negatively affected by retaining older people.
Japan and Singapore are two nations that Malaysians are very familiar with. Yet we have failed to observe that they are deploying oldies in cleaning, gardening, handicraft, customer service, and counter jobs. They also deploy oldies in paperwork administration as they are more detailed and meticulous than youngsters.
Instead, Malaysia is deploying young foreign workers who remit most of their income back to their home countries. Dr Sukudhew (Sukhdave) Singh, a former deputy governor of Bank Negara Malaysia, has commented that over-dependence on cheap foreign labour not only holds down incomes but also keeps the economy stagnant and erodes the search for alternatives.
As for Tun Dr Mahathir Mohamad’s fear that extending the retirement age means keeping a lot of deadwood in the office, this scenario will not happen because oldies need not get protection under the Employment Act as they can be recategorised as part-time contractors. So if they underperform or commit an offence, just show them the exit.
In a negotiated arrangement, seniors can be redesignated to non-command positions, working half day for half pay without bonus, EPF contribution, and medical benefits. It can even be a home-working (work from home) deal.
For a company, this effectively cuts their wage cost by two-thirds. For the Government, there are massive savings in civil service pension payouts. Companies and the civil service get to retain high levels of skill and expertise for one-third the cost. The seniors, in turn, get to spend sufficient time with their grandchildren and can buy them toys.
Furthermore, the new Budget extends tax deductions for employers who engage senior citizens until the year of assessment 2025. But why until 2025 only? It should be until next century. Don’t do things by half measures.
Won’t the seniors object to a big wage cut? Not if the Government offers high tax rebates for seniors aged 60 onwards on items such as medical expenses, life insurance and medical insurance premiums, travelling expenses, house repairs, mortgage repayments, expenditure on food, and lifestyle expenditure for purchases of computers, handphones, and reading materials.
In fact, the first RM60,000 of any senior earnings should be tax free because they are saving the national economy by saving themselves from ending up in Beggar Lane.