SINGAPORE — Already feeling the heat from rising rentals, as well as wage pressures in the tight labour market, businesses reacted with dismay at the labour movement’s call for employers’ Central Provident Fund (CPF) contribution rates for workers aged above 50 to 55 to be raised this year.
While they were resigned to the eventuality of the move — given that the Government had previously signalled its intention to close the gap between contribution rates for this group of workers and that of their younger counterparts — most bosses hoped hikes would not kick in until at least next year, so that they would have time to make adjustments.
Mr Vincent Foo, Director of cleaning company AO ServicePro, said he welcomes more help for older workers, “for the benefit of Singaporeans”. But he noted that firms are locked in to existing contracts and thus have no leeway to raise prices to offset any higher employer CPF contributions.
“Frankly speaking, it is not a good time, because labour cost has increased tremendously,” said Mr Foo. Four-fifths of his 300 workers are above 50 and wages make up 30 per cent of his operating costs.
Pointing to higher foreign worker levies, among other things weighing down on many firms’ margins, Director of cleaning services company SQ 1 Development, Mr Andrew Yeow, added that raising employers’ CPF contribution rates now would eat further into margins. Half of his profits go to paying salaries, said the employer of 400 workers, of which two-fifths are aged 50 to 55. “Employers like us will call it a day,” he added.
The Singapore National Employers Federation (SNEF) also stressed that “the timing for any increase is important”. Pointing out that the International Monetary Fund had warned that the global economy is not out of the woods yet, the Singapore economy “still faces many downside risks”, it added in a statement. “Hence, the Government should take into account the prevailing economic conditions and give adequate notice as to the timing for any increase,” it said.
The Association of Small and Medium Enterprises, however, welcomed the National Trades Union Congress’ (NTUC) suggestion. Its President Kurt Wee said: “Employers have to recognise that they have to be part of the social solution as well. I think we have to build an inclusive ecosystem between employers and employees.”
The NTUC’s proposal is aimed at helping workers in this age group save more for retirement and healthcare.
Asked if higher employer CPF contributions would help attract and retain older employees, bosses were mostly sceptical.
Mr Wong Koi Hin, who owns software development microenterprise Planetary, said workers will not see 1 to 1.5 percentage point increases as significant, especially those who are no longer servicing mortgage loans.
SNEF also cautioned that the cost impact of increasing employers’ CPF rates should not be seen in isolation. “We also need to be mindful of the employability of the unemployed when overall wage costs are increased.”
The Special Employment Credit (SEC) could be extended or made a permanent feature, it suggested, to incentivise the hiring and retention of older workers. The SEC subsidises employers for the wages of its workers who are aged above 50 and earning up to S$4,000 a month.