Low-wage platform workers to get 75% offset of additional CPF contributions for first year
Sharanya Pillai
LOW-WAGE platform workers who make additional Central Provident Fund (CPF) contributions will have 75 per cent of this increase offset by the government, for the first year after contribution rates start to rise.
Giving details of the transition support earlier announced in Budget 2023, Senior Minister of State for Manpower Koh Poh Koon said on Wednesday (Mar 1) that the offset will be tapered off over four years. It will be 50 per cent of the increase in the second and third years, and 25 per cent in the fourth year.
From the second half of 2024, platform workers born in 1995 or later will have to contribute to the CPF Ordinary and Special Accounts. Currently, they need only contribute up to 10.5 per cent of their earnings to MediSave.
Gig platforms such as Grab and Deliveroo will also have to make CPF contributions.
While an exact effective date has yet to be determined, this is an update from last November’s announcement that the rise would start “from the later part of 2024 at the earliest”. This came after the government accepted it and other recommendations from an advisory committee on platform workers.
CPF contribution rates will rise evenly over five years, at around 2.5 percentage points per year for workers and 3.5 percentage points per year for platforms – though this may be calibrated further if necessary, said Dr Koh.
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By 2028, the rates will match those of employees and employers: 20 per cent and 17 per cent of wages respectively, for those aged 55 and below.
The move “ensures a level playing field for all companies operating in the same field in Singapore and allows platform workers to receive similar basic protections as employees”, Dr Koh noted.
For eligible platform workers who make the higher CPF contributions, Workfare Income Supplement (WIS) payouts will be permanently raised to match those of employees, with the increase fully in cash. This will be implemented once platform workers’ contribution rates are fully aligned with those of employees.
Eligible platform workers could thus get up to S$4,200 per year – up from S$2,800 today – with 40 per cent in cash, up from 10 per cent today.
When platform workers start making regular CPF contributions from the second half of 2024, those eligible for the WIS scheme will also receive monthly instead of yearly payments.
These measures mitigate platform workers’ concerns about take-home pay, while providing a “significant boost” to retirement savings, said Dr Koh. The hope is that CPF contributions will “help relieve the stress felt by many younger platform workers on servicing their housing loans”, he added.
Workers born before 1995 can also opt in for the full CPF contributions. By doing so, a median-income platform worker aged 30 next year can have about S$450,000 in CPF savings by age 65, by the government’s estimates.
But those who opt in cannot reverse their decision, said Dr Koh: “In discussion with platform companies, it would be complex and add to compliance cost if platform workers are allowed to opt out after opting in.”
Nevertheless, he urged older workers to consider opting in. Those aged above 65 will be able to receive the same level of CPF contributions as employees of the same age, without having to make additional CPF contributions themselves, he added.
Other protections
The advisory committee’s other recommendations on enhanced representation and work injury compensation will also start from the second half of 2024.
A new committee – the Platform Workers Work Injury Compensation Implementation Network – is looking at how the existing compensation system for employees can be adapted for platform workers.
Meanwhile, an existing tripartite work group will determine how a representative body can formally seek a mandate to represent platform workers, through a framework backed by law.
Dr Koh said that in their discussions, the stakeholders have recognised that while the current representation framework for employees is a useful reference, the platform space is different.
The new framework should be flexible enough such that workers and platform companies “have maximum space to negotiate and find win-win outcomes that are fair to all parties”, he added. Updates will be given when the work group completes its work “in a few months”.
Dr Koh acknowledged workers’ worries that platforms may discriminate against them if they opt in for CPF, by assigning fewer jobs. He noted that the Tripartite Committee on Workplace Fairness has recommended that existing guidelines be enhanced to clarify that intermediaries, such as platforms, should treat contracted workers fairly.
“What this means is that platform companies must not discriminate when assigning work. The Ministry of Manpower will investigate any unfair practices,” Dr Koh said.
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