Grey tax not the way

Initiatives to encourage hiring of older workers are in place

In his letter, "A rice bowl for older workers" (Sept 10), Mr Peter Song suggested that the Government introduce a tax rebate linked to the number of older workers a company employs to encourage the employment of older workers.

We would like to thank Mr Song for the suggestion. A tax rebate scheme is however not the most effective for this purpose. The Tripartite Committee on Employability of Older Workers (Tricom) had earlier considered this but did not recommend it as it creates distortions in the labour market.

There are other more effective means which the Government has implemented after consultation with various groups. Examples include:

• The Advantage! Scheme funds companies up to $400,000 to recruit, retain and re-employ older workers through job redesign and automation, wage restructuring, training and putting in place re-employment systems.

• Lower employer CPF contributions for older workers to enhance their employability. Older lower-income workers are given higher Workfare Income Supplement, and the Prime Minister has recently announced that those above 55 and 60 would be given even more.

• New legislation, to be introduced as recommended by Tricom, and to take effect by 2012, to require employers to offer re-employment to workers reaching age 62, up to age 65, and eventually to age 67.

• Generous grants of up to 90 per cent of the course fees are provided to workers above 40 years old who attend training supported under the Skills Development Fund.

All these measures serve to encourage companies to hire older workers and to re-employ them beyond the age of 62.

CHEONG SWEE YING
CHIEF TAX POLICY OFFICER
MINISTRY OF FINANCE