Old fears over CPF rate hike for older staff
WHILE a proposed increase in the Central Provident Fund (CPF) rate for older workers will add to business costs, it is a necessary move, given Singapore's ageing population, said business leaders and economists yesterday.
On Monday, the labour movement called on the Government to increase the CPF contributions for workers aged above 50 to 55, from 32.5 per cent to 36 per cent.
This will put it on a par with the rate for younger workers.
Labour chief Lim Swee Say hinted that a step towards this parity may be taken during next Friday's Budget.
This will inevitably cut into businesses' profits, said CIMB economist Song Seng Wun.
Mr Kurt Wee, president of the Association of Small and Medium Enterprises, said businesses are already facing "a lot of constraints, in terms of labour shortages, wage increases and high compliance costs".
Advance notice will be welcome so businesses can adapt, he added. Mr Lim has said that unionists will not be pushing to close the 3.5-point gap in one go.
Singapore Business Federation (SBF) chief operating officer Victor Tay noted that when CPF rates for older workers were brought down in the past, it was to make it more affordable for employers to hire them.
"If the rates are raised, we need to analyse if it might make this group of older workers uncompetitive for hiring," Mr Tay noted.
But he acknowledged that with more CPF, older employees can maintain their health better, and "a healthier worker makes for a healthier workforce, which translates back to gains for the company."
Mr Song said any increase reinforces the point that older workers are just as important as younger ones, since companies have to rely more on locals to fill job vacancies with a tight labour policy.
It is also "consistent" with other government initiatives, such as the Pioneer Generation Package which helps older Singaporeans.
But with businesses likely to be reluctant to shoulder all the costs, "carrots may have to be dangled" to incentivise them, such as the Government co-sharing wage increases for older workers, he added.