Will NWC Suggest a Cut in CPF Contribution?

The National Wages Council (NWC) will take the unusual step of meeting again next month to revise the wage guidelines it set earlier this year. The review, announced by the NWC is prompted by the worsening global economic crisis since Sept. The new recommendations are expected to be announced in the middle of next month.

These will be watched closely by organizations in the public and private sectors as they set the direction for wage policies for the coming year. When the NWC made its recommendations in May, economic conditions were favorable, with growth expected to be between 4% and 6%. It also took into account the global economic uncertainty and high inflation. So the council asked companies to increase basic pay in line with their performance and business prospects. It also urged them to consider giving a one-off lump sum payment to rank-and-file workers to cope with inflation.

These suggestions were to apply for the period from this July to next June.
However, since September, the global financial turmoil has led Singapore to revise growth downwards to 2.5% or less this year. Next year, the economy could contract by as much as 1% or grow by up to 2%. Meanwhile, more and more companies are facing low demand and overcapacity and are looking for ways to cut costs to cope with the severe downturn.

With this new scenario, the NWC may suggest several new measures to help companies through the bad time. Those commonly used were having a shorter work week; let workers take off from work temporarily; use the flexible wage system to cut wage costs; wage reduction or frozen; a cut in employers' CPF contribution rates; Retrench.

Although it was unrealistic to maintain the call for wage increases 'with the economy looking very bad' ahead, but if they were to suggest a cut in the employers' CPF contribution rates, guess HDB loan defaulter will sure to increase. Imagine being chased out of your own house because of this.