Sent to Today paper on 9 February, but not published.
The Prime Minister has announced that the CPF contribution
The Prime Minister has announced that the CPF contribution
rate for older workers will be increased gradually.
I urge the Prime Minister to take the bold step and revert
to a flat rate of CPF contribution for all employees,
regardless of age.
Employers already have the means of adjusting the
wages of older workers based on their contribution and work
productivity. This can be carried out through negotiation on a
case by case basis, based on the financial situation of the
employer.
Older workers will accept a wage cut, if
their employer is not able to afford their high wage. They
are sensible and will accept lower wages to avoid
retrenchment or unemployment.
There is no need for the Government to legislate a
lower rate of CPF contribution for older workers which
have the negative consequences of disrupting their
savings for retirement and creating fear of financial
insecurity.
Tan Kin Lian
8 comments:
SMEs & SNEF's argument against it is just from one angle and is flawed. When the economy was bad during crises from the 1997 Asian Financial Crisis through Sars Crisis etc, the PAP Govt conveniently cut CPF across the board to help SMEs. MNC also benefitted. Ordinary workers sacrified. Some ugly MNCs even benefited but did not "pay-back" when times were good. There was discrimination against lower educated and older workers. The CPF rates were cut across the board. As a result PMETs also suffered. Door was open to cheaper FTs. Mid-level managers salaries then got marginalised. As a result, there was stagnantion of pay throughout except perhaps Ministers' salaries but cost of living ever-rising with inflation exceeding 5% and little or no pay rise. The civil service knows how to hike mid-level salaries. The private sector is still suffering especially in certain sectors. The CPF was a poor economic tool.
SMEs may need help when the economy is bad but not at the expense of lowering CPF which is meant for retirement. It should not be tampered again "out-of-syn" to cause more grave complications. Otherwise the Govt must take the future political price...if only things were debated in Parlaiment and taken in the right perspective as the late Dr Toh Chin Chye had argued...when Medisave was first debated in Parliament.
When CPF had to be cut, why PAP Ministers did not consider the "balance" that was tilted against ordinary wage earners who did not have a salary benchmark that allows 12 months bonus and not including 13th month AWS & 1.5 month AVC ?
When it is their own salary, they know what is the meaning of "balance tilted" although their salary is million dollars.
Don't let baby boomers lose out on CPF
Letter from Chan Teck Guan to TODAY
http://www.todayonline.com/Voices/EDC120211-0000010/Dont-let-baby-boomers-lose-out-on-CPF?fb_ref=.Tzh0zJ4Kzhc.like&fb_source=profile_multiline
I totally agreed with this writer. PM Lee said that it will be increased in stages ... I think it is already too late to reinstate in stages for some.
If it comes too slow, I am afraid baby boomers borned in the early 60s or earlier will go all out to vote against the PAP in 2016.
The PAP Govt under PM Lee had conveniently deprived these Singaporeans of substantial retirement savings together wi...th other reductions through the several crises with the use of the CPF cut as a blunt economic tool. They should also conveniently reinstate it now especially when we see stagnantion of income hitting the low and middle income earners.
Just yesterday, I heard from a friend who has already hit 60 y.o. and has not redeem his HDB mortgage but had lost his job on "contract" basis a few months ago. Even if he still has some savings left in his CPF account, just imagine how he could clear his mortgage now his job is gone. Getting a job at 60 is another big issue.
It clearly shows how badly out-of syn the Govt under PM Lee had managed and use the CPF as a blunt economic tool to conveniently get out of the economic situation then. But with pay stagnation now and uncertain economic conditions likely to worsen again, they are getting out of hand to reinstate our CPF, especially the old baby-boomers.
As it was conveniently done before, it has already become a "habit" to expect a cut in CPF during a downturn.
Note in this article in TODAY, Labour economist from UniSIM Randolph Tan simply puts it, "the government should not rule out the possibility of a CPF cut, if needed"...
http://www.todayonline.com/Singapore/EDC120212-0000042/Budget-needs-to-address-immediate-concerns--Experts
As the late Dr Toh Chin Chye once argued aggressively against using CPF to pay for healthcare and its likely abuse under Medisave, it has now become expected for ordinary workers to help finance business costs in an economic recession, while wages had also stagnated.
When CPF is cut, only Singaporeans and PRs are affected. It means their gross earnings are cut.
Foreigners are not affected.
Foreigners are "cheaper" but when locals' wages are marginalised, and with CPF cut further ... they are adversely affected if they have to service a heavy mortgage.
It only favours the firms (SMEs or MNC).
Some large firms (especially large MNCs) just wait to benefit from such CPF cuts and pray on local SMEs to make the noise for the Govt to take actions. In the long-run they continue to suppress the marginalised wages of the locals.
At the end it is always the Singaporean workers (incl PRs) who suffer through a loss of retirement savings.
Some points to note:
1. ST gets its revenue from advertisements by companies. So it will try not to publish letters or opinion pieces that makes life more "difficult" for companies. Same also for making life "harder" for PAP or govt, but that's another issue.
2. PAP strenuously advocated CPF cuts previously by justifying that this will lower labour cost and encourage companies to hire more S'poreans, or at least retrench less. Throughout the 1990s and 2000s -- 20 years -- PAP has been drumming this message and splashed across all the newspapers and TV news. Now the companies are simply regurgitating this old PAP reasoning to argue against restoring CPF for older workers.
3. Re above comment about having outstanding mortgage at 60. Today in S'pore you must target to pay off your mortgage by 50 at the latest. This is becoz of the increasingly uncertain job security situation here. Most PMEs who get retrenched in their 40s and above will have very difficult time getting another similar-paying job.
Unless you are a high-flying elite (CE of stat board or minister) or in a profession with long-term earning power such as doctor and lawyer. Even so, you need to ensure you still have large cash reserves in case of unforeseen circumstances. E.g. you are a million-dollar minister with a few bungalows and D9 condos, but what if you lost the next GE?
@Anon 12:14 PM
"Today in S'pore you must target to pay off your mortgage by 50 at the latest. This is becoz of the increasingly uncertain job security situation here."
Very sound advice. It is also my advice to those in the early 30s who are pursuing the EC dream at over $700 psf. But just look at the Qs and our Govt / MND happily pushing out land sales. Watertown? See if they will stay above water level...and good luck.
Once upon a time, the NTUC went all out to sell the concept of a variable wage system (VWS) with MVC and AVC and took the lead in restructuring wages in Singapore.
Do we still hear about VWS, MVC or AVC today? Yes, I saw it as part of the salary benchmark for the Million Dollar Salaried Ministers -Confirmed 13th month AWS + Confirmed 1.5 mth AVC + 6 mths variable performance bonus and 6 mths variable national bonus. They got all squeezed into the BM proposed in a national review.
I looked around me. What is MVC and AVC? What is VWS? Just as difficult to understand and visualise as the name of dinosaurs. My company does not practise it. My ex-company also does not practise it. They are all MNCs. Non-existent in the construction business?
I recently joined my ex-colleagues of a Korean MNC contractor for annual "yu-sheng" gathering. We knew no matter how hard we "lo-hei" there would not be any MVC or AVC or even bonus for them. They were complaining no " $88 or $20ang-pow" was given above their only 13mth AWS every year. I showed my empathy by listening. It was a blessing that I was retrenched by them several years ago when there were no projects.
This is how MNC had reacted to the Govt's call for a VWS many years ago. How many practise it today? How many firms really shared their profitability while wanting to cut costs?
Our SMEs are taking a negative stand to revert to a uniform CPF rate. They are hoping again the Govt will give a helping hand during economic downturns to conveniently cut costs across the board by lowering CPF rates. MNC are not implementing VWS but preying on the calls of SMEs and our "soft" Govt to take "hard" options on Singaporeans any time any ways.....
"Head you win , tail I lose" ... anyone game enough? Certainly, it is "out-of-syn" even if our GOVT has sound strategy to prove the worth of their million-dollar salaries.
Everything, from CPF to Moving Variable Component ( MVC) was discussed and debated, consulted with employer's Federation.
Yet, it was voted in due to "whip" what is the point when a decision was already made and the "debate" is merely a circus show?
Of course the Tripartite is a resounding success!!
This is well and good to attract foreign investments but it is but a hollow success. The investors a fully aware of the wayang.
It is now a structural issue..since the original "debate" was a wayang, severe injury is now visible and a repair though urgently required will no longer hold.. more sickness will follow.
Those who lead, and forced a decision will have to pay the price. Meanwhile, we suffer.
Curses to all who voted despite their beliefs.
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