Business

Tuesday October 18, 2011

Groups voice concern over retirement age proposal


PETALING JAYA: Three major industry groups have voiced their concern over a planned increase to the retirement age of the private sector as they claim the change adds to rigidity of employment in Malaysia, offers limited job prospects for young workers and reduces the country's competitiveness.

In a joint statement yesterday, the Federation of Malaysian Manufacturers, Malaysian International Chambers of Commerce & Industry and Japanese Chamber of Trade and Industry Malaysia said in principle they did not object to the move to lengthen the retirement age of private sector employees but employers should not be compelled to retain employees who were unable to meet their respective job requirements.

“Labour cost is estimated to increase by up to 40% over a five-year period under the proposed policy,” they said, adding that employers who now found it hard to terminate under-performing workers would in future have to endure them for a further five years, making a difficult situation worse.

Employers must have the right to replace inefficient or unsuitable workers in response to market needs and the competition so long as they comply with legal and mutually agreed compensation terms and conditions without going through lengthy legal processes as is the current situation.

“The private sector, without the compulsion of law, already extends the employment of workers beyond age 55 based on their manpower needs and on employment terms mutually agreed by both parties,” it said.

They said the mandatory extension of the retirement age across the board would also adversely affect employment opportunities for new entrants into the labour market and these apprehensions must be addressed because the private sector was the main engine of economic growth and was slated to play an even bigger role under the New Economic Model.

“Experiences from developed countries have shown that merely raising the retirement age may not be the most effective.

“A fair and progressive policy should consider the needs and benefits of employees and employers and provide enough flexibility, taking into account real conditions in the industries,” the joint statement said.

The three organisations said they were prepared to hold further discussion with the Government to achieve an amicable solution without severely reducing their competitiveness.

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