PROBLEMS OF THE AGED - (Paper Misc. 3 of 1984)
Mr Speaker, Sir, the Minister for Health is predictable. In typical fashion, he has decided that the best defence is offence and I must say that he has presented himself well and made a credible defence of this situation even though he knows that the vast majority of the people are against the recommendations of his Committee to raise the withdrawal age for ctsPF. Sir, to my mind, there has been no other repod in recent years that has managed to provoke a seemingly apolitical people, aroused the entire nation, and evoked such an outpouring of dissent against its recommendations. The Committee headed by the Minister for Health has the signal distinction of laying to rest the myth that Singaporeans are disinterested in issues facing the State. I think the Minister himself has very graphically described the response to the recommendations of his Committee. Yet the subject of the Committee's Report, the Problems of the Aged, is not a new one. Several persons have $poken up before, including the Minister for Social Affairs who devoted an entire lecture on the greying of Singapore when he addressed undergraduates at the National University of Singapore. Such public discourses on the subject were noted with interest, but did not touch any raw nerve. Perhaps the Committee, after its careful study of the problems we will face in the years ahead, decided that the magnitude of the problem required some shock treatment to drive the message home. It has therefore searched for a good focusing agent, to get Singaporeans to look at the situation 20,30 or even 50 years from now. It could not have chosen a more nerve-jarring focusing agent than its proposal to raise the withdrawal age of CPF from 55 years to 60 years and later to 65 years. Unfortunately, the proposal managed to focus the people's attention to the proposal itself, rather than the underlying problem. What is it that the Committee is trying to draw attention to? The Minister has said that it is the implications of the ageing of the population. Two factors are causing a rapid transformation of the composition of our population by age groups. The first is the increase in life expectancy resulting from better medical care universally available to our citizens. Whereas in 1947, Singaporeans expected to live tiii 50, in 1980 they may expect to live till 70 for males and 73 for females. The second factor is the decline in the birth rate caused by the family planning policy and the tendency to have less children among the better educated, In economic terms, what these changes mean is that there will be a small proportion of the population working, to earn the income on which to support the needs of the whole population, From the viewpoint of the State, the tax burden will fall on a smaller proportion of the people. If the level of social services that is provided by the State is to be maintained, then surely the tax rate will have to increase. I am not sure what the response of the taxpayers in the years ahead would be to such a tax increase. But social services will increase also as the proportion of older people increases. For example, as the Minister has amply stated, the cost of looking after the elderly will increase. It has been estimated that the cost of looking after the elderly is three times that for the young. The higher cost of providing services to meet the needs of the elderly is borne out by statistics on Government spending. As an example, in the United Kingdom, in 1980, while the proportion of the elderly, defined as those above 65 years, was 14.1%, the proportion of Government spending devoted to the elderly was just above 20%. The highest actually is in Sweden where the proportion of the elderly aged 65 and above amounted to just over 15% but the proportion of Government expenditure on the elderly is in the region of 30%. In terms of the family, assuming that family ties remain strong, smaller families mean that the responsibility of caring for aged parents falls on fewer children who will then have to fork out proportionately more. The generation of Singaporeans now in their 5Os and 60s on average had five to six. children. If each child supports the parents by giving $100 per month, the parents can live decently on $500-$600 a month. For the generation now in their thirties, the norm is two children. When they retire 20 years from now, if they receive the equivalent of today's $100 from each child, they will have to live on plain rice and pickles. As the Minister has said, the problem is indeed a major one. If we wish to grow old gracefully and live decently, then measures should be taken now to prevent a deterioration of our standard of living. I am in agreement with the Committee on its analysis and projection of the demographic profile 20-30 years' hence and the consequent impact on our society. The problem is that the Committee was not able to put its message across well to the public. Nevertheless, it should be commended for outlining the problem concisely and clearly. Twenty-five years ago, the challenge to Government was the capability to build schools to serve the young. Now the population change will test the ability of Government to be equally mindful of the old. The Committee draws attention to the fact that CPF balances are not enough to last the account holder the rest of his life, and seeks to remedy the situation to augment his income. The Committee quite rightly points out that it is a waste of talent to retire workers at the age of 55 years. I wholeheartedly support its statement that "the elderly must be recognised as possessing experience, skill, knowledge, talent and wisdom". They could not have chosen better words. I also agree with its observation that they are now more likely to be medically fit because of better medical care. The Committee made a direct call to the National Trades Union Congress to encourage its constituent trade unions to raise the retirement age first to 60 and then to 65 when they re-negotiate their collective agreements. I do not think the NTUC or its affiliates require any prompting. They have for years been pushing this issue with, regrettably, limited success. It is the employers who need prompting. I regret to note that there was no recommendation in the Report calling on the employers' organizations to urge their members to agree to raise the retirement age. At the same time, the Committee was against legislation to raise the retirement age. The Report states that "past labour force surveys have shown that the partici- pation rates those in the 55-59 age group have been steadily rising even in the absence of legislation." I do not know how accurate earlier surveys are because I know that 25 years ago, most people work until they were medically unable to continue. Such were the conditions then that they had to work until they literally dropped dead. The labour force participation, to my mind, would have been rated high if they had lived to 55-59 years of age or above. If we want to see whether there has been any improvement in the labour force participation rate for this age group, then we should look at the statistics of recent years. They are more likely to be comparable. If we are going to detect any trends, then I think we should look at them from the statistics available from 1979 to 1982. The Labour Force Surveys from 1979 to 1982 show that, for the 50-54 age group, the participation rate has remained steady at just above 57%. There is no increase. The participation rate for the 55-59 age group has varied from 47% down to 44%, and up again to 48%, indicating that most likely it is a steady rate with no improvement because of errors of compilation. The participation rate for those above 60 actually declined from 18% down to 16%. So I cannot agree with the observation by the Committee that the labour force participation rate of the elderly workers has increased. I know from experience that the majority of employers will not listen to requests to raise the retirement rate, let alone negotiate. This reluctance seems to be a universal affliction. The Committee has looked at other countries. So let us look at Japan. They are facing a rapidly ageing population, and they have studied the problems for many years. They have also thought that raising the retirement age is a solution to enable older people to be financially independent. So from 1976, the Japanese Minister for Labour was empowered to require enterprises to employ a certain proportion, 6%, of workers aged 55 or over. Progress was slow. So to make it more attractive, in 1979 the Japanese Government made half the salary paid to elderly workers in the 55-59 age group tax deductible for the enterprise. It was only then that the retirement age rose slowly. And now, from July 1984 the Japanese Government will introduce a subsidy plan for promoting re-employment of workers. Under this plan, an enterprise will be provided with 300,000 yen to 400,000 yen, depending on the size of the company, for each worker employed aged 60 to 64, who has retired from another company as he reached the latter company's mandatory retirement age, and provided that the reemployment is accomplished within three months of retirement. Re-employment must be made through contact between the two firms. This is to promote intercompany contact to facilitate re-employment. This example shows that if it is not desirable to use the stick, then the carrot will get results, slowly. Elsewhere, in the United States, they are not talking of retiring at 60 or 65 years. The mandatory retirement age was 65 until the Retirement Act of 1978 raised it to 70. As soon as this was mooted, discussions began by employers on how to circumvent it. One option was to stiffen productivity requirements, leading to more firings. The company might find the option of terminating the employee more attractive. Another option, more likely to be used, would be to improve the economic incentives of early retirement - the so-called "golden handshake", with which Singaporeans are familiar, to induce voluntary labour force withdrawal. We may expect similar responses here in Singapore if the retirement age is legislated. So legislation to raise the retirement age may not work. What incentives can the Government offer to make it attractive for employers to employ the elderly workers? Now, we also know that there are those who are working in physically demanding jobs where working beyond 55 years may not be practical. The worker himself may not want to continue and the employer may not want to employ him. There are also other jobs where good eyesight or dexterity of hands is important. With age, the level of productivity may actually decline. For such specific category of workers, re-employment in another job may be the only way to keep them employed. It is a well-known fact that the decrease in labour force participation of men has been relatively greater for the lesser edu- cated than for those who have higher qualifications. Since unemployed older men tend to have less education than younger workers, they are at a disadvantage when they have to seek other jobs. The Report of the Committee makes no mention of the fact that the older workers in Singapore have much lower qualifications compared to current fresh job entrants. Our older workers are poorly qualified not because of lack of talent or intelligence, but because of lack of opportunity when they were young. So retraining is likely to be required before redeployment or re-employment. Who will pay for such retraining? What schemes, apart from the BEST programme, will be pertinent to these workers? I foresee a continuing need for retraining, even for our younger workers who are better qualified. The pace of change of technology is such that knowledge becomes obsolete in a matter of years. The retraining needs of the present elderly workers will differ from those of the younger and better educated workers. Unless there is a practical and accepted solution as to how the cost is to be financed, employers will remain unwilling to employ older workers, except for the minority whom they consider value for money because their productivity has not declined but improved with experience. Any company-sponsored re-training is eligible for the Skills Development Fund grants. Perhaps it is appropriate that the SDF categorises the retraining of older workers under a new scheme and give it special attention. The Committee recommended that wages be determined by productivity, and calls again on the NTUC to counsel workers to help them overcome the psychological barriers that prevent them from taking up jobs at a lower pay. As the Minister has quite rightly pointed out,for as long as we have known it, we have followed a seniority-wage system. It is based on the principle that with experience, the worker is more productive and there is a ceiling on how much wage he can get. But to get the worker to admit that past 55 he is over the hill and should suffer a pay-cut raises all kinds of ego problems, His self-respect is involved. How does he face his own family when up to the age of 55, he is considered a good productive worker, but past his 55th birthday he is not as good as before when to the human eye there is no change in his physical appearance? Perhaps for a small category of workers who will become less productive in their jobs, there may be a more humane way. Maintain his take-home pay, but reduce the contribution to CPF. From 55 years to 59 years, the employer's contribution to CPF can be reduced by, say, 5% a year each year. The worker retains his self-respect. He gives to his family the same take-home pay, maintains his disposable income, while the wage cost to the employer is progressively reduced by up to 25%. If need be, additionally, there is the 2% payroll tax and the 4% SDF contribution. This could be exempted for workers aged 60. Beyond 60, adjustments could be made to the employee's contribution to CPF to achieve a reduction in wage cost. This scheme need not penalize the workers who are even more productive beyond 55 years. While the employer's contribution to CPF may be reduced, his wages could be adjusted to ensure that he is paid his market value, depending on his productivity and on market forces. The Committee is against the reduction or exemption of statutory levies. I think this stand has to be reconsidered. Now, let me turn to the controversial proposal to raise the withdrawal age of CPF. First, I think it is unreasonable to raise the withdrawal age of CPF before there is general acceptance of raising the retirement age. How is the worker expected to live from 55 to 60 if he is without a job? The Minister has earlier said that he has got other savings. But to which group of workers in Singapore is he referring to? To the lower income group or the upper income group? I am not sure that the lower income group will have that much savings, We can only consider the step of raising the withdrawal age of CPF, even if it is desirable, when we are sure that the worker will continue in his job till the age of 60. Secondly, Singaporeans expect to withdraw their CPF balances at 55 years, and have made their plans accordingly. Some wish to invest in business or place it in banks where they may get better returns, or utilize part of it to fulfil religious obligations, such as a pilgrimage to Mecca, or even reward themselves for the long years of labour by a holiday trip once in his life-time. The Committee contends that "the lump sum of CPF money gives them an illusion of financial security". It makes the assumption that the people as a whole are unwise, more likely to squander the money and, therefore, ought to be protected against their own weaknesses. I hold the opposite view. The vast majority of Singaporeans are hard-headed and realistic. They also happen individually to think that they themselves know best how to invest their money for maximum returns. It is this wish to maximize returns on their CPF savings that makes it so difficult for them to accept the possibility of later withdrawal. If they think that keeping their CPF balances with CPF is better than depositing with a bank or invest in stocks and shares, they would willingly leave their money with CPF. For example, raise the interest rate to 20% and see how many would withdraw their savings from CPF? I think the CPF Board would have a hard time asking them to withdraw. But what is it that the Committee was trying to achieve in suggesting deferring the withdrawal of CPF funds? It is not to keep the worker's CPF savings but to help him manage his savings. This is as far as I understood from the Minister's explanation. The question then is, to what extent should the Government protect the citizens against their own mismanagement? Should not the Government intervene as little as possible and allow the individual the satisfaction of managing his own money? The contributor to CPF has worked and planned on the basis of receiving a lump sum at 55. He does not need the entire sum at 55. Perhaps we can allow him to withdraw part of the CPF savings at 55 years, say, 25%. This would meet the requirements of most workers - to meet their living expenses, even to go overseas on pilgrimage or on holiday. At the same time, let us take measures to encourage employment till the age of 60 years. At 60 years, let us allow a worker to withdraw the balance, except for a certain sum. This sum has to be calculated. It should be enough to allow him and his spouse to live on bare necessities. They should not starve. Perhaps the sum would be enough to pay for rice and pickles or bread and water. And whatever he has above this sum, let him withdraw all of it and invest it. If he is able to manage it well, he can live a more comfortable life. In this way, it is likely that only a small number of CPF contributors will have balances below this fixed sum at 60 and will be unable to withdraw their CPF savings. I think this proposal is fairer to the worker and we do not burden the State with more responsibility than is necessary with the affairs of the individual citizen. Even if we succeed to raise the retirement age to 60 or beyond, and Singaporeans are conscious of the need to conserve their savings to see them through retirement, can we be sure that the elderly will be financially independent? There will still be those who do not have enough savings at 60. Who will take care of them? For centuries, Asian societies have regarded the caring of the aged as the responsibility of the children. If there is one virtue that traditional parents took care to instil in their children, it was a sense of gratitude and respect towards their elders. Today, family ties are still strong. This is borne out by a survey on values carried out in 1979 by the Leisure Development Centre of Japan. There were 13 countries in this survey, including Singapore. Respondents were asked to state "yes" or "no" to the statement that "parents have no right to make their children look after them in old age". Only 8.3% of Singaporeans replied affirmatively. This was the lowest among the 13 countries. Affirmative answers for the rest were about 20% or above. It was 49% for the United Kingdom and 66% for France. So Singaporeans came out favourably in this survey. I am not sure we can say that Singaporeans are more filial than their counterparts in other countries, but at least the right attitude prevails. But we cannot be sure that this attitude will remain strong. A number of factors suggest a likely weakening of this attitude. We are, as the Minister said, subject to Western influences. Rapid urbanization, resettlement and easy availability of HDB flats have broken down the extended family system into nuclear families. That is the consequence of one of our policies. All these factors will slowly erode our traditional concept of family relationships and responsibilities. I agree fully with the Committee that we must strengthen family ties and inculcate filial piety through education. At the same time, our traditional concept of family ties should be enshrined in legislation. I agree that we should make the children's responsibility of providing for the elderly enforceable by law. This measure is repulsive to some. They think it is an indictment on the people, that it implies an unfilial nation. I do not think so. We have legislation making crime punishable. Such legislation does not imply that we are a nation of criminals. In fact, the legislation is a statement of our principles and sense of justice. So likewise, legislation to make clear the children's responsibility towards parents actually indicates that respect and care for elders is considered a value worthy of enshrining by law. As such, I agree with the Committee's proposal on legislation. Sir, the Committee's Report touched on other social issues. I am sure my colleagues have a lot to say, and I will leave it to them. I do not agree with all the recommendations of the Committee and I have made some of my own proposals. My colleagues and I have discussed the Report, and we all feel that the Motion in the name of the Minister requesting this House to approve the recommendations of the Committee cannot stand without amendment. I think the Motion should be amended so that Government can take into account the views expressed in this House. When framing the amendment, I could have phrased a specific amendment touching on the controversial proposal to defer the withdrawal age of CPF. But I know that my colleagues in this House have other points to express and really it should be the consensus view of this House that should be considered by the Government. On this, the Minister himself has conceded. So I have phrased a general statement that would allow all the views of Members of this House to be taken into account. Therefore, I would urge my colleagues to support the Motion which I propose to make. Sir, I now beg to move that the Motion standing in the name of the Minister be amended, to leave out, 'approves the recommendations of the Committee on the Problems of the Aged' appearing in lines 3 and 4 and insert - 'recommends to the Government to adopt the Report, after making appropriate amendments to the recommendations taking into consideration the views expressed by this House'. Sir, I beg to move.