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In this exclusive with HRO’s Tracy Chan, JSM lawyer Jennifer Tam shares tips on managing older employees in the workplace, in light of China’s recent announcement around the gradual increase in the statutory retirement age.
The ageing population has become a global phenomenon. According to the World Health Organisation (WHO), by 2030, one in six people in the world will be aged 60 years or above. The data further predicts that the proportion of the world's population over 60 between 2015 and 2050 will nearly double from 12% to 22%.
China has one of the fastest-growing ageing populations in the world. The latest statistics published by the Ministry of Civil Affairs of the People's Republic of China and the China National Committee on Ageing showed that by the end of 2023, there was 296.97mn aged 60 and above in the country, and 216.76mn aged 65 and above, accounting for 21.1% and 15.4% of the total population respectively.
Meanwhile, WHO has revealed that life expectancy at birth in China has improved by 6.78 years – from 70.8 years in 2000 to 77.6 years in 2021, while healthy life expectancy has improved by 5.45 years – from 63.1 years in 2000 to 68.6 years in 2021.
To unleash the potential of the older workforce, China’s government announced in September 2024 the gradual increase of the statutory retirement age over the course of 15 years.
Starting 1 January 2025, the statutory retirement age for men in the country will be gradually pushed back from the original 60 to 63; while for women blue-collar and white-collar workers it will be extended from 50 and 55, to 55 and 58, respectively.
Keeping an eye on Hong Kong, the Census and Statistics Department also expects population ageing to continue. The number of elderly persons aged 65 and over is projected to nearly double over the next 25 years, increasing from 1.45mn in 2021 to 2.74mn in 2046. The increasing proportion of elderly persons in the total population has resulted in driving down the overall labour force participation rate.
As a city well-known for its diligent and hard-working lifestyle, should Hong Kong follow in Mainland China’s footsteps to postpone retirement as a way to tackle the manpower shortage?
“Extending the retirement age is one of the strategies being employed to address the talent shortage recently. However, extending the retirement age alone is not sufficient,” Jennifer Tam, Employment & Benefits Partner, Johnson Stokes & Master (JSM) (pictured below), tells HRO’s Tracy Chan, in this exclusive.
In fact, there is no statutory retirement age in Hong Kong. However, the age of 65 is often considered a turning point for the general workforce.
This may be owed to the practice of the HKSAR Government for raising the retirement age of civil servants of the civilian grades to 65 in 2015.
In addition, both employers and employees are not required to make mandatory contributions to Hong Kong’s retirement savings system, the Mandatory Provident Fund (MPF) scheme, once employees reach the age of 65. Also, MPF scheme members are allowed to withdraw their mandatory contributions and tax-deductible voluntary contributions upon reaching age 65.
Catering to the different needs and priorities of older employees
In the private sector, people can freely work for as long as they want upon agreement with their employers. Tam says this flexibility allows businesses to manage their workforce based on their needs.
Older employees, however, have different expectations towards work arrangements, incentives, and benefits, as well as wellbeing support in the workplace. Employers, therefore, need to tailor their recruitment, retention, and development strategies to cater to the distinct needs and priorities of older employees, she highlights.
“This includes offering appropriate training, benefits, and/or flexible working arrangements to ensure the older employees remain engaged and productive.”
She then elaborates on the aspects employers should pay attention to when engaging with older employees.
First, both employer and employee should reach a mutual agreement on the work arrangement.
“Employers should review and update the employment contract to reflect the agreed retirement age and any new arrangement.”
To attract and retain older employees, Tam suggests employers could consider offering flexible working arrangements such as part-time work or remote work options.
“But these arrangements should be clearly documented in employment contracts and policies to avoid any potential disputes,” she emphasises.
Providing ongoing training and development opportunities can also keep older employees engaged and productive.
In terms of retirement benefits, since the MPF contributions for employees over the age of 65 are voluntary, employers may need to reconsider to provide adequate retirement benefits and incentives for older employees to remain in the workforce.
“Employers should decide whether to continue making these contributions or offer other financial planning assistance to help older workers prepare for retirement.”
Medical benefits may be another key concern for older employees. Tam reminds employers to investigate whether insurance policies cover older employees adequately as some may have age limits or exclusions for certain conditions.
“Reviewing and possibly enhancing retirement and medical benefits can make the transition smoother, ensuring that older employees feel valued and supported throughout their career.”
Above all, she highlights the importance of creating a safe and inclusive workplace.
“Employers have a duty to provide a safe working environment for all employees and they may need to make reasonable adjustments to accommodate the needs of the older employees,” she says.
“While Hong Kong has no specific laws against age discrimination and harassment, fostering an inclusive environment is encouraged to support older employees in the workplace.”
Keeping the communication going
Whether with older or younger employees, communication, especially two-way communication, is always paramount in the journey of employee engagement.
Tam believes transparent and open dialogue can help manage the expectations of the employer and employees, in turn fostering a workplace where everyone can thrive.
“An employer should discuss retirement plans, potential roles post-retirement, the work arrangement, and any changes in benefits, etc. Regular dialogue can help both parties plan effectively,” she concludes.
This article first appeared in the H2 2024 edition of Human Resources Online's Hong Kong e-magazine. View the e-magazine here, where you'll find power-packed features and interviews with leaders across various sectors!
Interviewee photo / Provided
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