Proposed two-year CPF freeze puzzles unionists

THE proposed two-year delay in restoring the Central Provident Fund contribution rate to the full 40% has left some union leaders puzzled.  

Why fix such a time-frame, they asked, especially when the signs pointed to an economy heading upwards? 

Workers, on the other hand, seemed resigned to it. But they were uncertain if it would help prop up the job market.  

Lai Siew May, 39, a factory operator, spoke for many when she said in Mandarin: “It won't affect me so much as I don't have the CPF money in my hands now. But two years is quite a long time to wait. For now, I'm just concerned about keeping my job.” 

While unionists and workers had no quarrel with a freeze this year due to economic uncertainties, some noted the Economic Review Committee's proposal was jumping the gun as it was still early in the game. 

The ERC said on Thursday the delay would keep a lid on business costs while sending a strong signal to investors that Singapore was serious about staying competitive. Its proposal to hold the rate at 16% would be debated in Parliament next month.  

Yesterday, the unionists suggested it would be “fairer” to review the economy's performance at the end of this year before deciding whether a CPF freeze was necessary for the next year. 

Nominated MP and union leader Nithiah Nandan said: “The ERC said it would leave no stone unturned when reviewing the economic policies, but I would like to urge the government not to cast this two-year deferment in stone.” 

His argument echoed that of many others interviewed. 

What if the economy turned for the better next year - would workers still be expected to wait another year before the CPF rate goes up? And what if the volatile economy plunged again in 2005 when the time was ripe for a restoration - would workers be expected to bite the bullet again? 

On Thursday, Deputy Prime Minister Lee Hsien Loong explained the rationale for the two-year wait: “What we have to persuade people is that we want to be absolutely sure that everything is settled, that we are competitive, that we have a strong platform to deal with the things we need to do, and to do that, it is best that we commit now to a two-year non-restoration.” 

Many government leaders interviewed yesterday at various functions also talked of the need to keep wage costs competitive. 

Deputy Prime Minister and Defence Minister Tony Tan said: “This is a very strong signal to companies and investors that we are taking decisive steps to overcome this current recession.” 

Investors would be encouraged to set up companies here, he said, generating more economic growth and jobs – benefiting all Singaporeans. 

Until then, union leaders have the unenviable task of persuading workers to accept the wait. Said Singapore Bank Employees Union president Simon Chin: “It will be hard to convince workers they have to wait, especially if they see the economy recovering.” 

Speaking for workers in the banking sector, he said: “They will generally not be happy and will point out that the banks are still making money ? so why can't my CPF increase?” – The Straits Times/Asia News Network 

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