Unionists call for restoration of CPF rate to 40%

SINGAPORE — Not satisfied with the 1-percentage-point increase in the Central Provident Fund (CPF) contribution rate for all workers — taking the overall rate to 37 per cent — unionists at a post-Budget dialogue yesterday called for the CPF rate to be restored to the pre-1999 level of 40 per cent, citing rising medical costs as the reason.

Speaking to reporters after chairing the dialogue involving about 200 union leaders, labour chief Lim Swee Say said unionists also asked if the Government’s previously-stated long-term target of 30 to 36 per cent was still relevant, since the new overall contribution rate already exceeds the range.

Noting that a tripartite meeting will be held soon to discuss the possibility of a new long-term framework for the CPF. Mr Lim added: “Any increase in CPF, I think, obviously will have an impact on business. Timing-wise, we have to look into the state of the economy.”

He also stressed that the labour movement is responsible and mindful of potential implications for business.

The unionists’ call came after Finance Minister Tharman Shanmugaratnam announced on Friday a 1-percentage-point hike in employer CPF contributions — from 16 per cent — for all workers, which would be channelled to Medisave accounts to increase support for lower- and middle-income individuals.

However, he assured employers the Government did not expect to make further changes to total CPF contribution rates soon and added that future tweaks would have to take into account economic conditions, business costs and competitiveness.

Yesterday, unionists said they welcomed the increase in employer CPF contributions, but Amalgamated Union of Public Daily Rated Workers’ General Treasurer K Raman said many senior citizens are in need of more financial help due to rising medical costs.

Agreeing, Attractions, Resorts and Entertainment Union President Hassan Abdullah said he hopes there will be feedback and pressure from the union and tripartite partners to restore CPF contribution rates in next year’s Budget.

Responding to the unions’ calls, President of the Association of Small and Medium Enterprises Kurt Wee said employers are not unsupportive of increasing CPF rates for older workers, but noted that a sudden, big rise was “not very understanding towards businesses”, which are already facing higher costs.

Singapore National Employers Federation Executive Director Koh Juan Kiat said the Government had assured them that it would not raise employer CPF contributions any time soon.

Mr Tharman also addressed concern that companies might be deterred from hiring workers above the age of 50 to 55, following the 2-percentage-point increase in employer CPF contributions. Speaking during the post-Budget live programme, Ask the Finance Minister, on Channel NewsAsia last night, he said the Government is giving employers a very strong incentive to hire older workers through the Special Employment Credit and 8 per cent subsidy for firms.

“So, employers have to play their part and this step that we’ve taken for (those aged) 50 to 55, as well as small steps for older workers, is, I think, the right thing to do,” he said.

“But most important is … that we still have a journey to eliminate ageism in the labour market. It is still difficult for an older Singaporean, compared to a younger (one) and, basically, these are a matter of social biases.”

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