People who are currently employed, as well as job seekers, should pay attention to a government proposal to extend the mandatory retirement age that is moving swiftly through the legislature.
On Friday, lawmakers on the Sanitation, Environment, Social Welfare and Labor Committee completed a preliminary review of an amendment to Article 54 of the Labor Standards Law (勞動基準法). The proposed amendment restricts employers from forcing an able-bodied worker to retire before 65 instead of 60.
This proposal is likely to be passed into law following a second and third reading — which could come within weeks or a few months at the latest. The idea of delaying retirement age is a logical one, given Taiwan’s rapidly aging society and the expanding pool of middle-aged and elderly people who are capable of working and don’t want to retire. But once passed, the legislation will have a profound impact on the labor market, good or bad.
On one hand, the proposed change reflects an effort by the government to better use the human resources provided by the middle-aged and elderly. The growing shortage of trained and experienced personnel in many industries and the declining birth rate mean that companies will have a difficult time filling vacant posts. On the other hand, the proposal is necessary because the existing mandatory retirement age appears outdated, as the health and longevity of Taiwanese have been improving.
The current retirement age of 60 was set in 1984 when the Labor Standards Law took effect. But official data shows that the average life expectancy in Taiwan has risen from 70.5 for men and 75.5 for women in 1984 to 74.65 for men and 80.74 for women today.
Postponing mandatory retirement would also help ease the financial burden imposed on the workforce by our rapidly graying society. Government data shows that on average, 7.2 working-age people supported one senior citizen in 2006. The government predicts that ratio will drop to 3.3 workers to one retiree in 2026 and to 1.5 to 1 by 2051.
Overall, the drive to revise the law has been motivated by the anticipated labor shortages and fiscal pressures from an aging population. But attempting to address these problems by changing the law without taking into account of the working conditions of different occupations could create other problems.
First, an extended mandatory retirement age is likely to best serve public servants and workers at the state-run enterprises because of their stable work environment, but it may not suit people in physically demanding jobs that require a specific level of fitness.
Second, an abrupt change in the age requirement without policy flexibility for different occupations could create tension in the labor market. What happens if workers receive a pink slip earlier than they want because their employer does not want to pay the extra pension and health insurance costs?
Third, delaying retirement could lead to fewer work and promotion opportunities for the younger generation.
Perhaps the government and lawmakers should consider amending the draft proposal to create a grace period and provide policy flexibility for different occupations so that private-sector employers have time to do the necessary financial planning, including contract revisions, pension and other compensation plans to deal with the new labor market trend.
A more considered approach to the proposed retirement change could create a win-win situation for both employers and workers as far as work efficiency and timely retirement are concerned.
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