Impact of National Wages Council 2020/2021 Guidelines on CPF Contributions on Local Employees

22 Mr Chua Kheng Wee Louis asked the Minister for Manpower with regard to the National Wages Council 2020/2021 supplementary guidelines on the tripartite consensus not to reduce employers' CPF contributions, what is the potential disproportionate impact on local employees should there be such a reduction.

Mrs Josephine Teo: The National Wages Council (NWC) issued its Supplementary Guidelines on 16 October 2020, encouraging employers and employees to work closely together to minimise retrenchments. This is preferred over a blunt approach of reducing employers' CPF contributions across the board. Such an approach cannot take into account the varying circumstances of individual companies and employees, both in effecting the cut, as well as implementing the restoration. In addition, as CPF contributions are made only for local workers, a cut in employers’ CPF contributions places the cost reduction burden solely on a firm’s local workers, when it should apply to all its workers.