Jobs Credit ’strategic’

It would achieve more than a CPF cut, and enhance tripartite trust
By Goh Chin Lian, Senior Political Correspondent

LABOUR chief Lim Swee Say yesterday rebutted criticisms that the Government should have cut the employers’ Central Provident Fund (CPF) contribution rate instead of having the Jobs Credit wage support scheme as a way to save jobs.

The latter would achieve more than a CPF cut, he said, and it would also strengthen the trust that now exists among the tripartite partners – the Government, workers, and employers.

This was because the labour movement, together with the Government, spent the past 20 years urging workers and companies to move towards a flexible wage system in which some components are variable.

Cutting the employers’ CPF contribution rate now before trying other cost-saving measures would only break the tripartite trust, he said.

He defended, in particular, the Government decision to draw on past reserves to introduce the $4.5 billion Jobs Credit scheme as a ’strategic’ move.

The scheme pays employers 12 per cent of the first $2,500 of each month’s wages for each resident worker. This is equivalent to a 9 percentage point CPF cut.

Mr Lim, who is Minister in the Prime Minister’s Office, made these comments yesterday at a conference for civil servants, in the wake of former permanent secretary Ngiam Tong Dow’s criticisms of the decision not to cut CPF in this downturn.

The Government had made the cut in the 1985 recession, a move which Mr Ngiam described as ’strategic’ in a talk to African policymakers at the S. Rajaratnam School of International Studies and condensed in an article published in this newspaper last Saturday. By comparison, Jobs Credit was a ‘tactical’ one to prevent massive unemployment, he said. It simply gave uncompetitive enterprises a short reprieve.

Without referring to Mr Ngiam by name, Mr Lim said: ‘There’s a school of thought…that a CPF cut is a strategic move. Jobs Credit is a tactical move. I disagree.’

Workers have been told that cutting employers’ CPF may produce ‘unequal’ results and are urged to move towards a flexible wage system that combines fixed and variable monthly payments, as well as a year-end bonus, he said.

via Straits Times

Related posts:

1. Singapore’s Jobs Credit Scheme to be extended for 6 months on stepped-down rate

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