Will raising the re-employment age loosen up Singapore's tight labour market?

Re-employment age is raised from 65 to 67.

The two-year difference in Singapore's re-employment age will be positive for the city-state's efforts to ensure a continued supply of labour despite its ageing workforce and maintain labour market flexibility.

According to BMI Research, the continued participation of older workers in the labour market will also be positive for the government's fiscal position, ensuring a steady flow of revenue while keeping social spending low.

"We believe that these changes will be positive for Singapore's tight labour market as well as the government's ongoing efforts to keep the population working for as long as they are willing and able to. In addition, the government has been trying to move the economy away from its overreliance on foreign labour towards one that is knowledge based," the firm said.

BMI noted that as such, the retention of these older workers, particularly in skills-intensive industries, will be positive for the ongoing efforts to increase the level of human capital as these workers can pass on their skills.

"Furthermore, employers are only required to rehire workers if they have satisfactory work performance and are healthy and able to continue working. This will also help Singapore overcome the problem of an ageing workforce, with the proportion of residents aged 60 and above in the labour force having increased to 12% in 2015, compared with 5.5% in 2006," BMI added.