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Businesses seek more time for CPF rate increase for older workers

The Singapore National Employers Federation (SNEF) supports the labour movement's call for a "gradual increase" in CPF contribution rates for older workers.

SINGAPORE: The Singapore National Employers Federation (SNEF) supports the labour movement's call for a "gradual increase" in CPF contribution rates for older workers.

However, businesses want time to prepare and are calling for eight to nine months' notice.

Like businesses across the country, Ya Kun Cafe's operating costs will go up if employer CPF contributions for older workers are increased.

But the company is expanding, and in a tight labour market, such a move is in line with its hiring strategy.

Mr Wong Chee Meng, chief financial officer of Ya Kun Group, said: "In order to attract and retain these staff, I think it's a good incentive to keep them within the company and encourage them to work."

There's a sense of relief that the proposed increase is small -- at between 1 and 2 percentage points -- but Mr Wong is hoping any hike will be no more than 1.5 percentage points.

Nearly a third of Ya Kun's total workforce is between 50 and 55 years old. This is one company who says their commitment to hiring seniors will not change, even if CPF rates go up.

Mr Wong said: "It has always been our philosophy to provide employment for older workers. We will still continue to encourage them to work for us, despite the slight increase in costs."

The Association of Small and Medium Enterprises (ASME) does not think the move will affect the hiring of older workers.

Mr Kurt Wee, President of ASME, said: "I don't think over 1, 1.5 (percentage points) CPF, businesses will take that kind of stand. But if you say I'm going to raise by 3.5 (percentage points) overnight, I think businesses might be quite alarmed if that happens. So we're very appreciative if it's a progressive approach."

To mitigate the cost impact on employers, SNEF also suggests the government extend or make the Special Employment Credit (SEC) permanent.

The SEC is a twice-yearly payout for employers who hire Singaporeans above 50 years old, and who earn under S$4,000. The scheme was launched in 2012, and currently scheduled to end in 2016.

Experts say a bigger CPF contribution from employers will benefit older workers overall, especially those with qualifications and experience.

But one labour economist said seniors without either of those may suffer, in terms of their employability.

Associate Professor Randolph Tan from SIM University's Centre for Applied Research, said: These are the workers who are most in need of the CPF restoration, no matter what the rate is. The question is whether their wage competitiveness will be preserved?

"When you have this restoration, will they become even more expensive for employers who are considering quite a large number of substitutes in the labour market?"

The SNEF said the employability of those who are out of job could also be affected if CPF rates go up.

So it supports the labour movement's call to review CPF contribution rates over the long term, so that businesses will not face any unexpected changes. 

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