A PROPOSED increase in contributions to the Central Provident Fund (CPF) accounts of older workers would add to business costs, but also has its plus points, company bosses say.
They hope such a move would attract more older people back to the workforce, which would help alleviate the labour crunch.
The labour movement has called on the Government to raise the CPF rates of those aged 50 to 55 so that they are on a par with younger workers.
The CPF rate of these older workers is 32.5 per cent compared with 36 per cent for younger workers.
The rate was cut in 2003 along with other CPF tweaks amid an economic downturn.
Mr Francis Koh, the group chief executive of property and construction firm Koh Brothers, said that any move to raise the employers’ CPF contribution rate for older workers would add to the already high costs for companies here.
“We will have to see how we can do things in a much better way and mitigate costs in other areas, like in utilising technology,” he said.
But the firm will not look to reduce the headcount of its older workers and is committed to ensuring that they can stay active for as long as possible.
“We owe it to these long- serving workers and their years of contribution for helping Koh Brothers be what it is today,” said Mr Koh.
Excluding foreign construction workers, the company employs about 400 staff. An estimated 15 per cent of them are in their 50s or 60s.
Super Bean International operations director Thomas Koh said the company has not done any analysis of what an increase in the CPF contribution rate would mean for it, but that costs will certainly rise as a result.
“Still, we are more than happy to reward our staff. The labour crunch is a major issue for us so if this attracts more people to come back to work, that would be fantastic,” he added.
Mr Kurt Wee, president of the Association of Small and Medium Enterprises, said that businesses are already facing a “myriad of challenges, and have to balance a lot on their plate”.
“We hope that the Government will take a progressive approach, as this will give businesses time to adjust and plan,” he said.
Given the tight labour market, however, Mr Wee said the gains from older workers moving back into the workforce are likely to be only “incremental”.
“To some extent, we might be able to get some incremental yields... but Singapore is already at full employment,” he added.
Still, “any labour is welcome by SMEs, as long as they are capable and willing to contribute”.
We hope that the Government will take a progressive approach, as this will give businesses time to adjust and plan.
– Mr Kurt Wee, president of the Association of Small and Medium Enterprises
Source: The Straits Times © Singapore Press Holdings Limited. Reproduced with permission.
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