Employers open to raising the retirement age amid ageing workforce
The debate on whether to raise the retirement age in Malaysia from 60 to 65 has been reopened, drawing a mixed reception from employers and labour groups.
The Malaysian government in 2019 rejected the proposal to raise the mandatory retirement age in the country from 60 to 65 amid challenges related to the youth unemployment rate.
But more than five years later, the discussion has been reopened after Minister in the Prime Minister's Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said suggested looking at 65 years as a retirement age.
"It is my personal view, not the Cabinet's view. Some of the officers that we have met are still young (at heart) and are active," Azalina said as quoted by Malay Mail.
According to the minister, many older citizens remain healthy and capable of contributing to the workforce.
"It is just that they reached 60 years old," she said.
Her proposal was met with a variety of reactions from different groups.
Malaysian Employers Federation president Datuk Dr Syed Hussain Syed Husman noted that it would be a good idea as people are living longer and healthier, The Star reported.
"We should find ways to keep them employed, provided their skills and knowledge are still relevant and needed," he said as quoted by the news outlet.
The MEF president, however, noted that a challenge would be ensuring that younger people would remain employed and promoted.
"While we want to keep older people in the workforce, businesses must keep growing to accommodate both groups," he said.
Union Network International-Malaysia Labour Centre president Datuk Mohamed Shafie BP Mammal also said that raising the mandatory retirement age can be discussed.
"I think a retirement age of 65 is sufficient as our life span is already within the 70-80 range," Shafie said as quoted by The Star. "If 65 is not possible, maybe we can try 62 or 63, but the idea is good."
Malaysia HR Forum chief executive officer Arulkumar Singaraveloo, meanwhile, said the country could look at Singapore's mandatory retirement model, where employment contracts after the age of 65 are dependent on health, performance and discipline.
"Re-employment should be under revised terms and conditions, including a different salary scale and pension recalculation to avoid unsustainable fiscal commitments," he said.
While businesses are open to the idea, youth groups and unions have reservations.
Abdul Rahman Mohd Nordin, secretary-general of the Congress of Unions of Employees in the Public and Civil Services (CUEPACS), said raising the retirement age to 65 is subjective and depends on individual and social factors, New Straits Times reported.
"Some welcome the move as a chance to stay active and continue contributing, but many prefer early retirement for their health and a more balanced life," the official said as quoted in the report. "Many women, in fact, would prefer to retire at 55, which was the previous mandatory retirement age."
Rahman, however, pointed out that flexible retirement options would help, as some people in good health can further develop their experience and skills.
"Longer employment also strengthens financial security and provides better preparation for retirement," Rahman said.
Meanwhile, the Malaysian Youth Council (MBM) expressed strong opposition to the proposal, Business Today reported.
The council said in a statement that increasing the retirement age would reduce labour market turnover and job opportunities for young people.
"Extending the retirement age would prolong the cost of employing older, higher-salaried workers, which could limit companies' ability to hire younger and potentially more productive workers," the MBM said.
The country's Department of Statistics revealed in February that the unemployment rate among its youth aged 15 to 24 is at 10.3%, equivalent to 298,000 jobless youth.
The MBM stressed that the government's focus should be on creating an economic structure that supports both senior and young workers.
"Raising the retirement age is not just about whether someone can still work — it's about fairness, opportunity, and the right of younger Malaysians to access meaningful employment," it stated.
The proposal to raise the mandatory retirement age comes as Malaysia became an ageing society in 2020, according to the World Bank.
It also comes as neighbouring countries hike their mandatory retirement age. Thailand last year unveiled plans to raise the retirement age to 65.
China also approved an increase in the retirement age for men to 63 last year. For women, those in white-collar jobs will see an increase to 58, while those in blue-collar jobs will have their retirement age set at 55.
In Singapore, the retirement age was increased to 63, while the re-employment age was hiked to 68 in 2024. It targets a retirement age of 65 and a re-employment age of 70 by 2030.
