The Malaysian Trades Union Congress has shot down a suggestion by the World Bank to gradually increase the retirement age to 65, saying it will only lead to more unemployment among the youth.
Instead, the government should increase the minimum wage, said MTUC deputy president Mohd Effendy Abdul Ghani in an interview with Free Malaysia Today.
However, an economist, Shankaran Nambiar of the Malaysian Institute of Economic Research, said a higher retirement age would help older Malaysians stay self-reliant longer, and also keep up aggregate demand in the economy.
Effendy said the current employment market was “very demanding” and that an increase in the retirement age would affect new jobseekers.
“It will affect the younger generation. It is expected that there will be 280,000 new graduates by the end of this year, and there will be an increase in the unemployment rate because of limited job opportunities for them,” he said.
While he admitted that the idea of a “happy retirement by the age of 60” was becoming a distant reality due to insufficient savings, Effendy said it would be more appropriate if the government were to extend the retirement age on a case-by-case basis according to individual sectors, expertise and skills.
Effendy noted that a 2018 survey of 1,000 Malaysians aged between 18 and 55 conducted by the Credit Counselling and Debt Management Agency found that more than 50% of the respondents may not be financially ready for retirement.
He said MTUC would rather have the government increase the minimum wage than increase the minimum retirement age – a view which Cuepacs, the country’s largest civil servants’ union, also shared a few days ago.
Nambiar said that as Malaysia was heading towards being a nation with an ageing population, people will have to burn through more of their savings to maintain the cost of living and healthcare as they progress.
“As you get older, you’re more likely to get sick and there are costs involved,” he said. “Who is going to bear these costs?”
Nambiar also disagreed that the increasing number of fresh graduates, and the lack of job opportunities to go around, was an excuse to keep the retirement age low.
“The economy has to grow; more jobs have to be generated,” he said. “We can’t keep thinking of the number of available jobs as a constant number.”