EMPLOYERS are receptive to rehiring workers past 65 but are worried about the costs of doing so.

They flagged wages and medical bills as the main challenges in rehiring older workers and are hoping for subsidies that could help alleviate the burden.

The firms were reacting to the Manpower Ministry's announcement on Monday that from next January, incentives will be offered to firms that voluntarily rehire workers past 65.

Details of the incentives are now being worked out. They will be announced next year but backdated to Jan 1, 2015.

Currently, companies are required by law to offer re-employment to eligible workers when they turn 62, up to the age of 65.

Most of the 12 bosses who spoke to The Straits Times said they were open to rehiring older workers, in the light of the tight labour market.

"Older workers are valuable... but employers are worried about the costs," said Mr Brenton Ong, director of human resources at Concorde Hotel Singapore.

More firms will voluntarily rehire workers beyond 65 if they get financial help to pay for the treatment of chronic illnesses which older workers are prone to suffer from, he said.

Other employers suggested wage subsidies of between 10 and 25 per cent for older workers. These will allow them to offer higher salaries and cut down on working hours.

"If we re-employ workers we may have to rework salary levels because their efficiency or productivity may not be as high," said Mr R. Dhinakaran, managing director of lifestyle and fashion retailer Jay Gee Melwani Group.

Mr Edlan Chua, chief operating officer of Chinese restaurant chain Paradise Group, added: "Some older workers may be working 44 hours a week. With a wage subsidy, we can offer them the same pay but they can work, say, 36 hours a week."

Other employers suggested that training courses can help to ensure that older workers have relevant skills.

"Their skills may need to be updated, and this will benefit both employers and employees," said Mr Jimmy Fong, executive chairman and CEO of Apple reseller chain EpiCentre.

The incentives should lead to real change, said National Trades Union Congress (NTUC) deputy secretary-general Heng Chee How. "We hope to see a change in legislation to raise the re-employment age to 67 soon. But there is no consensus yet on the timing of the change," he said.

It could take a while before companies are ready for a change, said Senior Minister of State for Health and Manpower Amy Khor on the sidelines of an event yesterday.

"Not so many firms are prepared to employ beyond 65. So we need to give them time to adapt to the upcoming change," said Dr Khor, who heads the Tripartite Committee on Employability of Older Workers.

For older workers who want to work beyond 65, their main worry is taking a pay cut. Said private school lecturer William Loh, 61: "If you're doing the same job, companies have no right to reduce remuneration. Just because I'm older doesn't mean I will lecture less or mark fewer papers."

Others hoped that their employers will continue to offer them medical benefits, such as paying doctors' fees and medicine.

Mr Teoh Ah Kian, 62, a baker at Giant supermarket at IMM Mall, said: "We also get dental benefits, so this helps to reduce my expenses."