By Joachim Ng
COVID-19 is reported to give the aged a hard time, and Perak is the worst hit as it has more oldies than any other state. Being considered vulnerable, they are usually told to stay at home and yet each new wave drives more of them under the bridge.
Even before the virus crept into our lives, the aged were already getting a thrashing from human society. Aging is defined as the experience of retirement. At 60 you lose your job, and your health begins to worsen. That’s a thrashing you don’t deserve as you have another 25 years to go. If by 70 you no longer have money to buy nutritious food, you become a prime target for the virus that brings on Covid.
At each new height of the pandemic, volunteer groups found dozens of homeless people wandering in the streets of Ipoh and arranged for them to be housed. But nobody other than infants, the infirmed, the fatally sick, and deathbed seniors should have to be entirely dependent on charity. Perak has 15.3% of its population aged 60 and above, yet we cut off the income lifeline of 60-year-olds and hope that they can manage without further connection to the national economy, except for their EPF savings. What sickly thinking is behind this?
The Finance Minister disclosed three months ago that 50% of EPF members would exhaust their savings within five years of retirement. So at age 65, you transit into the high-risk category and it’s not because you’re old. It’s because you’re destitute.
But if you are fortunate enough to retire with RM240,000 EPF savings, at 6% interest you will get a dividend of RM1,200 a month which is the current minimum wage but well below the national poverty line income of RM2,208. Bear in mind that retirees spend a lot on health products and medical insurance premiums.
The previous retirement age was 55. It was set in the 1950s because the life expectancy then was 60. Your EPF savings were expected to last five years because you didn’t need money beyond age 60.
Today the life expectancy going forward is 85 years. How can you be retired at 60? The argument for pushing you out is that youngsters are looking for jobs. What rubbish! Department of Statistics figures in November 2019 showed that employers gave jobs legally to 2.3 million documented foreign workers. Around the same time, the International Organisation for Migration gave estimates that our workforce comprised up to 4 million undocumented migrants.
More than 40% of all jobs in Malaysia are held by young foreigners. The problem is not job scarcity but wage disparity. A 59-year-old may earn RM6,600 monthly or RM125,000 annually with bonus, company contribution to his EPF, medical benefits and other entitlements. But a 20-year-old fresh graduate may settle for RM1,400 monthly or RM25,000 annually–a choice many are forced to make to avoid being jobless. Get rid of Mr Tua and you save RM100,000!
It’s a Robin Hood game. Strip the old of their income to pay the young a fifth of it. By 2030, at least 15% of the population will be aged 65 and above. Must they become the human sacrifice for our national economy? The pagan habit of just sacrificing one virgin at the altar was much less painful.
There is one more unkind cut. Interest rates keep sloping down to make loans cheaper for businesses. This means dividend rates also go down. So the oldies are burnt twice at the altar — when they lose their jobs, and again with the returns on their retirement investments or savings getting lower and lower.
Our national economic planners are bankrupt of fresh ideas. This issue of wage disparity between the young recruits and the old hands can actually be easily resolved. Below are the steps to be taken for retaining 60-year-old employees until age 75. Why 75? That’s the final year you are allowed to make EPF contributions, but you continue to be a member getting dividends until age 100.
Start by cutting off Mr Tua’s bonus and all entitlements at age 60 and move him to a non-command position unless he’s needed to run the show. This reduces his annual income of RM125,000 to RM80,000. You have already saved RM45,000.
After five years when he is 65, put Mr Tua on half-day work for half the monthly pay. His annual income now drops to RM40,000. At age 70 cut his pay by 40% and compensate him with a 3-half-day work week. Mr Tua now earns RM24,000 annually or just RM2,000 a month.
To help the oldies adjust to a progressively lower pay regime, the income tax structure must be restructured to make it aged-friendly, unlike what it is now. For anyone past 60, the first RM80,000 of their annual income should be tax free. So Mr Tua pays no more income taxes from hereon.
But our current taxation system is very punishing to those aged folks who manage to earn some income. Every ringgit they earn has to be filed in the tax returns, and their tax relief is very low despite high expenditure on medical insurance premiums. At every step of the way, Malaysian society is discriminating against the aged.
The most famous justification for dismissing older folks is that they are senile. So why did you vote in Tun Dr Mahathir Mohamad and the coterie of hyper-active politicians aged above 65?
In fact, senior workers outpace youngsters because of their experience, shrewdness, better thinking ability, problem-solving skills, customer orientation, dependability, loyalty, and lower absenteeism. They rarely fall sick and don’t play office politics. If you ask a senior and a junior to resolve a customer dispute, who do you think will come up with a better solution?
Not all seniors want to retain their jobs, of course. Some are keen on taking up a full time role as caregivers to grandchildren. That’s fine, as long as they have the means to do so.
While cutting the old folks’ pay, the Government should revise the minimum wage significantly upwards for the youngsters. With this bold stroke, you narrow the salary gap and incentivise companies to retain their 60-year-olds on part-time basis for their experience.
The current minimum wage of RM1,200 per month is unbefitting of a nation that aspires to high-income status. It works out to a measly RM7.50 an hour. A restaurant waiter in Australia earns 18AUD an hour. Any self-employed Bangladeshi contractor in Malaysia earns three to five times our minimum wage. Malaysian salaries are one-third lower than in developed countries for the same level of productivity.
If we raise the minimum wage to RM1,600 it will make all jobs financially attractive for locals and hence reduce our dependence on foreign labour. This will curb the spread of any newly emerging coronavirus because the largest group of infection clusters are the foreign worker dormitories that are now everywhere.