By Hafidz Baharom
If there were any more divisive topic beyond politics, it would be about age – the age of voting, driving, drinking, smoking, withdrawing our Employee Providence Fund (EPF) monies, and finally – retirement.
The government is now in the process of studying whether or not to raise the official retirement age of Malaysia to 65. According to Human Resource Minister M Kulasegaran, this was in lieu with suggestions from the Malaysian Trade Union Congress (MTUC) to be tabled for Budget 2020.
“We have full employment in the country at the moment. We will study and make a good decision in the near future,”M Kulasegaran, quoted in the Malay Mail
However, the idea is currently being challenged by the Minister of Youth and Sports, Syed Saddiq Syed Abdul Rahman. Syed Saddiq took to Twitter to state his case regarding concerns on youth unemployment in the country.
“I oppose the proposal to increase the retirement age from 60 to 65 years. Comparing it with advanced nations is not accurate. Japan’s youth unemployment rate is 3.4 per cent, Singapore (5.9 per cent) and Germany ( 6.2 per cent). In Malaysia, some 500,000 young people are still unemployed or 10.7 per cent,”Syed Saddiq Syed Abdul Rahman, quoted in The New Straits Times
Two problems needing balance
There are two problems that the two ministers here are trying to address. The first is that those retiring currently at the age of 60, do not have enough funds to last them throughout their retirement.
The EPF has highlighted this issue two years ago, stating that those headed to retirement just don’t have enough funds to live. This was further emphasised by economist Jomo Kwame Sundaram in October 2017.
This year , EPF raised the minimum savings target by age 55 from RM197,000 to RM228,000. But only 18% of members have this much, far short of its target of getting at least half its members to meet the minimum level by 2021.Jomo KS, written in The Star
His damning column in 2017 still reverberates today – how does one expect the retiring Malaysians aged 60 and above to last 12.5 years average on the savings they have in their EPF and nothing else?
Meanwhile in 2018, CompareHero came up with this infographic to show how much an average younger Malaysian saves, spends and have in debt.
Kulasegaran is not wrong to want to raise the retirement age for seniors who cannot afford to live on their savings. However at the same time, Syed Saddiq is also not wrong to worry that this will impact the youths.
Later retirements mean that more posts will not be vacated or created in companies to make room for fresh graduates and younger executives, in order to balance the operational costs.
At the same time, we have a huge problem with job creation. Statistics from the Trading Economics website shows that we have a huge slump in job creation since 2018 which never fully recovered.
However, I myself are unsure if this reflects the figures employed by the gig economy.
Thus, both sides have a point in wanting jobs for both the retiring senior Malaysians and the Malaysian youth, but there just aren’t enough jobs to go around.
This is the biggest issue that both sides along with the Ministry of International Trade and Industry, as well as the Ministry of Economic Affairs, along with the Ministry of Finance, don’t seem to want to address.
Rather, they would prefer to parade foreign domestic investment figures and how the economy is growing, but refusing to address the fact that job creation is low whilst we are talking about raising the retirement age and more youths are graduating with degrees and failing to find jobs, settling instead for the gig economy of being food delivery riders and ride sharing drivers.
The MTUC is also not wrong in wanting to keep ageing Malaysians employed, nor are they wrong to propose a RM500 cost of living allowance. But at the same time, we do need to address the fact that we have an issue of job creation lagging behind.
And if this continues, then we would need to look at the rights of those participating in the gig economy – minimum wage, rights to annual leave and healthcare coverage, and even retirement funds and social security benefits.
Some of this have been done with GrabCar during their PSV licensing debacle, but are we going to do the same for the FoodPanda, GrabFood, Delivereat, Honestbee and such riders?
Unless we can somehow spike the figures on job creation, we will continue having the friction of raising the retirement age against youth unemployment. So, perhaps it is better to ask why job creation is lagging as it is, and what is being done to fix it?