TAIPEI (CNA) — The Executive Yuan on Thursday approved a draft act that will allow employers to offer new contracts to workers aged 65 and older, increasing the flexibility of existing regulations that set the mandatory retirement age at 65.

In light of the relatively low labor force participation rate of those aged 55 and over in Taiwan amid a rapidly aging population, the Ministry of Labor formulated the draft act to encourage deferral of retirement for middle-aged and elderly workers, protect their right to return to the workplace and allow them to enjoy fair employment opportunities, Deputy Labor Minister Lin Ming-yu (林明裕) told a news conference.

Under the draft bill, middle-aged workers are defined as those aged 45-65, while elderly workers are those over 65.

The labor force participation rate of middle-aged workers in Taiwan is about 62 percent, lower than South Korea’s 65 percent and Japan’s 70 percent, according to Lin.

The number of workers aged above 65 in Taiwan is about 280,000, Lin said, adding that the draft act was devised to outlaw age discrimination in the workplace and promote the employment of older workers.

The draft bill also contains measures to prohibit age discrimination in the workplace, provide unemployment compensation and employment subsidies for older workers and give rewards to employers who retain their original employees after they turn 65 years old or hire elderly workers.

The draft bill stipulates employers cannot subject anyone to unfair treatment because of their age, including in terms of recruitment, job allocation, performance evaluation, promotion, salary, retirement and redundancy payments. Those caught violating the age discrimination rules in the employment act could face fines ranging from NT$300,000-NT$1.5 million (US$9,657-US$48,286).

In addition, as long as employees are protected under the Labor Standards Act and re-employed, their employers are obliged to contribute funds equivalent to a minimum of 6 percent of monthly salary to employee pension accounts every month regardless of whether they have already received retirement payments or labor insurance pension payments, according to the Labor Ministry.

According to data compiled by the Ministry of the Interior, as of the end of 2018, Taiwan’s population aged 15-64 was 17,107,188, accounting for 72.52 percent of the total, the lowest level for nearly 10 years.

Meanwhile, the aging index, which refers to the number of seniors per 100 persons younger than 15 years old in a specific population, climbed to 112.64 last year after passing the 100 mark in February in 2017, indicating that the available workforce continues to fall.

Currently, the number of workers aged 45-64 in Taiwan accounts for over 40 percent of the total working population and could reach over 50 percent by 2065. In addition, it is forecast that the total working population will halve in the next 50 years, with 50 percent to be composed of those aged 45-64, according to the National Development Council.

Premier Su Tseng-chang (蘇貞昌) said at a Cabinet meeting Thursday that the draft bill was formulated to promote the labor force participation of older workers, ensure their right to fair employment opportunities and encourage employers to reutilize those aged over 65 based on fixed-term contracts.

Meanwhile, the new policy was positive received by the business sector.

Lai Cheng-i (賴正鎰), head of the General Chamber of Commerce of the Republic of China, said that in the face of labor and talent shortages, the draft act will help to meet business demand for manpower.

By Ku Chuan and Evelyn Kao