Parliament: Review employer's CPF rates, make annual wage supplement mandatory for low-wage workers

Labour MP Zainal Sapari suggested having one universal rate for employers' contributions until workers reach 65.
Labour MP Zainal Sapari suggested having one universal rate for employers' contributions until workers reach 65.ST PHOTO: KUA CHEE SIONG

SINGAPORE - It is time to review employers' Central Proident Fund contributions for older workers, given that the current rates were set 30 years ago in 1988.

Labour MP Zainal Sapari, during the Budget debate in Parliament on Tuesday (Feb 27), suggested having one universal rate for employers' contributions until workers reach 65, to help low-wage workers, especially older ones, to save enough money for retirement.

Currently, the employer's contribution rate towards workers' Central Provident Fund (CPF) accounts decreases progressively after the worker reaches 55 years of age.

The different CPF contributions rates, tagged to different age bands, were introduced in 1988 with good intentions to ensure companies could remain competitive, noted Mr Zainal (Pasir Ris-Punggol GRC).

However, many workers, regardless of their age, are already being paid based on the job value, as Singapore has moved away from a seniority-based wage structure, he said.

Singaporeans are living longer, requiring them to save up more for retirement. There are also many who still need to service their mortgage loans and take care of their aged parents, who are also living longer, he added.

"It is also in our best interest to ensure that workers can meet their basic retirement sum as it would reduce the burden on social services in later years, which would have had to be shouldered by the current working population," he said.

The assistant secretary-general of the National Trades Union Congress suggested making the annual wage supplement - the so-called 13th month bonus - mandatory for all workers. This could increase the salaries of low-wage workers by 8.3 per cent, which would help narrow the widening income gap, he said.

Speaking separately to The Straits Times after his speech, Mr Zainal said that only about 20 per cent of workers in the security and cleaning industries receive AWS.

In his speech, Mr Zainal also recommended amending the Employment Act to include better medical coverage for workers, by making employers pay for the full cost of non-chronic outpatient treatment at polyclinics or company-appointed clinics.

Currently the law only requires employers to pay for the medical consultation fees when a worker sees a doctor for outpatient treatment and there is no requirement for employers to pay for their employees' medication costs.

Wrapping up his speech, Mr Zainal called for more to be done to help low-wage workers.

Mr Zainal, who made headlines recently for a blog post describing the plight of low wage workers as "the slavery of the poor", said his post might have caused discomfort to some readers but there is nothing he would change about the message he wanted to convey.

He said his post was to echo the sentiments of low-wage and elderly outsourced workers. "These workers are real. Their families are real. The problems they face are real," he added.