SINGAPORE: Singapore’s labour chief has urged employers to consider restoring their portion of the Central Provident Fund (CPF) contributions in the wake of a strong rebound of the Singapore economy.

Mr Lim Swee Say made the call after visiting a company on Thursday.

Currently, the total CPF contribution rate stands at 34.5 per cent of an employee’s wage and the government’s long—term goal is 36 per cent.

Singapore’s compulsory savings scheme, the CPF, has often been described as a blunt instrument. Its contribution rates have been cut several times during downturns to help companies reduce wage costs.

In 2003, the government said the 40 per cent long—term target would be replaced with a flexible 30 to 36 per cent range.

So from 33 per cent in 2003, it went up to 34.5 per cent in 2007 — with employers contributing 14.5 per cent and employees 20 per cent.

Rob Sanchez, vice—president, Sales and Marketing, Cameron Singapore, said: "I believe we are still riding the storm and with the help of the Singapore government, this facility here has weathered the storm, hopefully better than most."

And with a strong recovery in sight, labour chief Lim Swee Say said it is time to consider some form of CPF restoration.

Mr Lim said: "In about 2003, we set our self the target of keeping the CPF in the range of about 30 to 36 per cent. Since the last few years, it had been kept at 33 per cent and the last time the adjustment was made in 2007 when we adjusted the CPF rates from 33 to 34.5 per cent.

"At 34.5 per cent, obviously there is a 1.5 percentage point from the longer term target of 36 per cent.

"On the part of the labour movement, we feel that given the strong recovery and performance of the economy in the first quarter as well as the healthy outlook for the rest of the year, and given the healthy low unemployment situation, we think that in a way this is a good opportunity for us to consider some form of CPF restoration.

"In other words, as we continue to grow our economy and upgrade our productivity, wage pressure will go up. But it’s important we don’t put all these wage increases into our pockets and spend them for today.

"We must recognise that with longer lifespan and with programmes like CPF Life, the Ministry of Health has highlighted many times that we need to have more money for healthcare in the future.

"When the situation is right, we should consider to increase further the CPF contribution rate, moving towards 36 per cent.

"There are many factors to consider when it comes to the quantum of the restoration. On the part of the employers, I am sure many of them would be worried about whether the turnaround is sustainable and the cost of doing business here — for example increase in foreign workers levy."

"What we hope is that the government will take into consideration the desire of the labour movement to take full advantage of the present situation to consider some restoration.

"On the part of the labour movement, we are not pushing to get there in one step. What is important is, we want to register our appeal that given the climate today, it is a good opportunity.

"Because looking ahead, we are not so sure when we will have another opportunity where we will see strong growth, low unemployment and healthy outlook. So therefore, we feel that this is a good opportunity and we should not let it pass."

Wong Weng Ong, president, Shipbuilding & Marine Engineering Employees Union, said: "It is the right time to increase the workers’ wages because during the downturn, the workers sacrificed a lot. When times are good, we should reward the workers."

However, the Singapore Chinese Chamber of Commerce and Industry feels any increase in the CPF rate may lead to an upward pressure on wages and hopes Singapore’s long—term competitiveness would be taken into account before a decision is made.

While the Singapore economy is improving, the labour chief also emphasised that it is important not to lose sight of other targets and objectives. One of them is to improve productivity levels in Singapore.

For this, Mr Lim proposed that some of the best practices of the larger companies be shared with the small and medium enterprises.

Mr Lim also noted: "I think it is good for companies that are doing well to reward their workers and share the gain with them.

"On the part of the labour movement, our urge for companies, workers and union leaders is that as we reward the workers fairly in the year 2010 given the better performance, it is important that we keep the wage system flexible.

"In other words, not all the wage increase should go into built—in wage increases. Some could be in the form of mid—year and year—end bonuses."

Mr Lim hopes a decision will be made before the National Wages Council recommendations at end—May.

Overall, the labour movement is happy its mantra to ’upturn—the—downturn’ and cut costs to save jobs has paid off.

Manpower Minister Gan Kim Yong said the government will consider carefully the labour movement’s call and it will take into account employers’ concerns on business competitiveness. — CNA/vm