PETALING JAYA: The question of retirement age has come to the fore once more as Malaysia marks Labour Day tomorrow.
Any suggestion to extend the retirement age has always been a contentious subject, as seen in the protests that erupted in France following President Emmanuel Macron’s move to introduce pension reforms which raised the retirement age from 62 to 64.
Here in Malaysia, there are diverse views among economic experts about upping the retirement age beyond 60.
Sunway University professor of economics Dr Yeah Kim Leng said there were several advantages and benefits in raising the mandatory retirement age, starting with selected critical sectors requiring high-level skills.
“Given the skill shortage in certain sectors, this approach has to be needs-driven.
“It would also enable the working age population to prepare mentally and plan for a slightly longer career amidst longer life expectancy,” he said when contacted.
While high-skilled workers were less likely to face inadequate retirement savings, he said lower income workers in designated sectors would benefit from the additional income-generating years (from any increase in retirement age).
“Although it is simpler to implement a national ruling if there is a majority consensus among employers and employees, the sector-based approach is likely to be less disruptive.
“Any adverse outcomes would be more easily managed while smoothing the way towards nationwide implementation,” he said.
The mandatory retirement age in Malaysia was raised from 55 to 60 in 2013.
Yeah said the education and healthcare sectors, as well as industrial sectors facing “hollow middle” organisational syndromes and skill shortages such as the electronics and electrical sectors, could be potential candidates.
“The same goes to other advanced manufacturing and service industries.
“A more detailed industry analysis and consultation with industry players, however, will be needed to ascertain the selection,” he added.
On whether there could be negative social implications in Malaysia if the retirement age was increased, Yeah believes this is unlikely.
“This is due to extensive stakeholder dialogue and a consultative approach typically adopted by the Malaysian government prior to rolling out major reforms and restructuring.
“And with efforts taken by the government to address key issues such as low income, inadequate retirement savings and the rising cost of living, there is a greater public trust and confidence in policy reforms,” he said.
In the case of France which saw huge demonstrations, he said this could be attributed to deep-seated public anger directed at the government for failing to adhere to representative democracy.
“The retirement age increase was the lightning rod,” he said.
Commenting on the French protests, Malaysia University of Science and Technology Research and Innovation provost Prof Geoffrey Williams said there might be anger (if the retirement age was increased) but Malaysians were not inclined to violence.
“There is more likely to be passive, disappointed acceptance and the possibility of older people being unproductive and disengaged in their work,” he said.
Prof Williams said there was no sector that would necessarily benefit from increasing the retirement age in terms of skills.
“It would have the danger of keeping people with out-of-date skills in the sectors concerned and hold up job opportunities for younger people.
“Questions of who should work and how long they should work should be left to the individual and the market.
“This allows people to work as they choose,” he said, adding that increasing the retirement age in select sectors could distort the (job) market and do more harm than good.
“If their skills are in demand, they will find work, otherwise they can retire gracefully as they choose,” Prof Williams added.
