COMPANY bosses are exploring ways to find savings in other parts of their operations, should the Central Provident Fund (CPF) rate for older workers go up.
They are looking at boosting productivity or lowering bonuses if the employer contribution rate rises, on continuing concerns about higher wage bills.
Last week, the National Trades Union Congress (NTUC) called on the Government to raise the CPF rates of those aged 50 to 55. The CPF rate of workers between 50 and 55 is 32.5 per cent, compared with 36 per cent for younger workers.
Business development manager at food manufacturer Ha Li Fa, Mr Randall Ang, said: “It will add on to costs especially in this situation of a full employment workforce that we are facing.”
Singapore National Employers Federation executive director Koh Juan Kiat pointed out that members have to worry about other wage and business costs. These include increases in foreign worker levies and higher compliance costs due to changes in the Employment Act which mean more workers are eligible for overtime pay.
“While we hope that higher CPF rates encourage more older workers to remain or enter the workforce, we would be concerned over the timing of any increase in view of the economic situation,” Mr Koh said.
Acting Manpower Minister Tan Chuan-Jin urged caution on the calls to raise CPF rates in a parliamentary reply on Tuesday.
Bosses say they are supportive of any scheme to help older workers build their nest egg in spite of the cost pressures.
But they are worried about how they would fund that heavier burden.
One way is to pass on the costs to consumers by raising the prices of goods and services, though this is a measure of last resort, said Chang Gen Traditional Chinese Medical Hall partner Low Kwee Hee.
“I will have to bite the bullet and take less profit. If there’s really no choice and the cost is too high, then we will have to increase the price,” he said in Mandarin.
Mr Low, who has six employees including two older workers, said an alternative is to cut the bonus given out to employees since that is not required under the law, unlike a CPF hike.
“Let’s say I pay them $10 more in CPF contribution a month, then I may cut their bonus by $120 for the year. But I haven’t decided anything yet.”
City Satay general manager Chow Koon Meng hopes the Government will come up with measures to help companies stay competitive, especially if it wants firms to hire more older workers.
“There is a sort of contradiction, because the Government wants to encourage the hiring of older workers, but if they are raising the CPF rate, there is a disincentive. I hope there will be something else to balance any increase,” Mr Chow said.
The president and chief executive of precision engineering firm Makino Asia, Dr Moh Chong Tau, is not worried about any CPF hike, even though one-fifth of his 490-strong staff are above 50 years old. “As long as productivity improves, the costs will be manageable.”
Source: The Straits Times © Singapore Press Holdings Limited. Reproduced with permission.
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