Higher CPF contribution to have minimal impact on firms: DBS

[SINGAPORE] The increase in Central Provident Fund (CPF) contribution proposed in this year's Budget would have minimal impact on listed companies in labour-intensive sectors, DBS Group Research said in a report released yesterday.

Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam said last Friday that the CPF rate for employers would go up by at least one percentage point to help pay for workers' future healthcare needs. Besides a one-point rise that will go into the Medisave account of all workers, employers must contribute more to the CPF of older workers.

DBS noted that sectors such as banks, retail, transport and construction are operating in a more labour-intensive environment than others. Among those with a high staff cost-to-revenue ratio is SATS Ltd, which hires about 11,000 staff here. Staff cost accounts for about 44 per cent of its revenue. Another example is SMRT, which employs about 7,600 people. Its staff cost makes up about 40 per cent of its total revenue.