Subsidy won't ease labour crunch: Bosses

EMPLOYERS welcome the new government scheme that subsidises the hiring of older workers, saying it will help ease rising business costs.

But the wage subsidy does not ameliorate the larger problem, which is the scarcity of older workers with the relevant skills in the current tight labour market.

The shortage is especially acute in such labour-intensive sectors as manufacturing and retail where workers are expected to be physically fit or agile, said 10 employers interviewed yesterday about the upcoming Special Employment Credit (SEC) scheme.

PestBusters, for instance, tried hiring about five seniors in the last three years, but they 'came in for two training sessions and gave up', said its chief executive Thomas Fernandez.

Automation is out of the question as 'no robot will come and catch cockroaches for you'.

'We have to rely on human beings and they got to be agile and strong, to climb up attics to look for termites, or to lift heavy manhole covers,' he added.

Business federations also do not see the SEC as the immediate answer to the labour crunch confronting companies as bosses look at competence, skills and adaptability when hiring older workers.

The SEC was announced in the new Budget to defray the cost of the higher contributions that employers will soon have to pay into the Central Provident Fund (CPF) accounts of older workers.

The SEC will pay bosses up to 8 per cent of the wage bill of older workers earning up to $4,000 a month, and employers will pay these workers up to 2 percentage points more for their CPF.

The full two-point increase will be for workers between the ages of 50 and 55, raising their employer's contribution rate to 14 per cent.

Workers aged 60 to 65, however, will get 0.5 point more, lifting their employer rate to 7 per cent. Both measures take effect in September.

The Singapore National Employers Federation said the SEC will 'more than cover' the cost of the CPF hikes for the first five years.

But it noted that the key obstacles older job-seekers face are 'skills, relevant experience and adaptability'.

Likewise, the Singapore Business Federation's chief operating officer Victor Tay said the main issue in hiring older workers is 'job fit and competence, not incentives or the CPF hike'.

Also, he is worried about the 'unintentional maximum wage' imposed on the older workforce, because the SEC subsidy is lower as wages rise above $3,000 a month. It drops to zero when the salary exceeds $4,000.

Mr Tay disclosed that on Monday, 130 representatives from trade associations and business chambers were briefed on the Budget changes.

'Most said the SEC will give immediate relief to rising wage costs for hiring older workers, but they doubt it will lower their overall manpower cost that includes foreign worker levies, or alleviate the manpower crunch,' he said.

Unemployment in Singapore is at a 14-year low of 2 per cent.

Ms Lynn Tan, managing director of hair care products distributor Fusion Cosmetics, said it is tough to get staff of every level, 'be it a warehouse assistant, retail assistant, or production manager'.

'There is no ageism here. It is just that no one turns up for interviews and no one works for long,' she said.

But some employers hope the higher CPF rates will coax older workers to return to work, said Association of Small and Medium Enterprises president Chan Chong Beng.

This would improve an employer's foreign worker dependency ratio - a policy which requires companies to hire a specific number of Singaporeans before they can take on foreigners.

But calculations by economics professor Chia Ngee Choon show it will be $40 cheaper to hire a Singaporean older worker than an S Pass holder at the same salary of $2,000 a month - after taking into account a $160 S Pass levy.

But Ms Faith Wong of ISS Facility Services said in the cleaning sector, older workers are always in big demand.

ISS has 4,000 cleaners. Half are Singaporeans and most of them are 50 and older. They are paid $1,000 to $1,200 a month against $700 to $800 a year ago.

Still, there are not enough locals. She said: 'At this point, we are afraid to bid for new contracts, as we are not confident of finding the workers we need.'