by ASILA JALIL / pic by TMR FILE
MALAYSIA needs policies that would enable local employees to work longer in the future, while maintaining good health in the long run.
Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed (picture) said Malaysians are expected to work longer to ensure adequate financial protection in their old age as the country transitions into an ageing nation.
The minister said longer working lives would, in turn, require gradual adjustment to the retirement age for most Malaysians as reflected in most high-income economies.
“Parallel policies are needed to foster productive employment, such as enhanced opportunities for training and lifelong learning.
“Such policies will allow Malaysians to work longer with less physically demanding occupations and more digitally enabled workplaces,” he said during the launch of the World Bank report titled “A Silver Lining: Productive and Inclusive Ageing for Malaysia” yesterday.
The provisions of minimum income protection for older Malaysians will also require further improvement in terms of coverage and adequacy of social insurance schemes, Mustapa said.
He cited the Employees Provident Fund (EPF) i-Saraan scheme and the Social Security Organisation’s self-employment social security scheme as proactive examples that aim to cover the entire labour force.
However, he recognised that some aspects could further strengthen linkages between the scheme, as well as further collaboration with an industry association.
“However, even with such proactive measures, it is unlikely that social insurance schemes will be able to cover the entire labour force. Thus, a modest, broadly targeted tax-financed social pension may also be required.
“As an increase in fiscal expenditures may be challenging in the current context of the fiscal shock of the Covid-19 pandemic, the provision of minimum income protection for older workers will require a mixture of public policy measures on both expenditure and revenue side,” he said.
Mustapa said it is also crucial for Malaysia to create an enabling market and regulatory environment for the aged care sector to be the new driver of economic growth.
“The Malaysian government is committed to embracing the challenges of ageing and reaping the opportunities that it can provide.”
The report stated that Malaysia is transitioning into an ageing society this year as more than 7% of the country’s population will be aged 65 and above.
The rate of ageing will increase in the coming years and the share of the population aged 65 and above is projected to double to 14% by 2044 and to reach 20% by 2056.
It underscored that the employment rate of those aged 50 to 64 in the country is low, as well as among women. This is partly driven by the relatively low minimum retirement age and low EPF minimum withdrawal age, while women face constraints related to childcare, the legal environment, and gender norms and attitudes.
The report also said women who are covered by social insurance on average have lower EPF balances than men partly due to the prevailing gender wage gap.
“As a result, the average EPF balance at age 54 is RM177,000 for women and RM233,000 for men. With regard to aged care, since women on average live longer, they have particularly pronounced care needs.”
An increase in the minimum retirement age to 65 does not only improve employment opportunities for older workers, but also foster old-age income security.
“The promotion of productive and inclusive ageing will require policies that foster the productive employment of all workers, provide minimum income protection to all older persons, and build an inclusive aged care system.