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CPF contributions will soon be mandatory for younger gig workers aged 30 and below.
This change will kick in from the latter half of 2024, an advisory committee said in a report published Nov. 23.
Opt-in available for older workers
Gig workers include private-hire car drivers, cabbies, and freelance delivery workers who use apps.
The mandatory CPF payments will be made compulsory for those in the group under 30 years old, the report said.
This means that based on 2021 figures, the change will immediately affect about 4 per cent of private-hire car drivers and 31 per cent of delivery riders.
Meanwhile, older workers will be given the choice to opt in.
This is a significant change as currently, platform workers only need to contribute to their CPF Medisave Account.
Both platform workers and platform companies will be affected by the change.
Younger workers need most help in housing
The change is part of a suite of 12 recommendations raised by an advisory committee looking into the welfare of platform workers.
All 12 were accepted by the government and will be implemented starting from the second half of 2024.
In a 60-page report, the committee said the rationale behind the policy is that younger workers are more likely to have housing obligations or plans to buy a house.
Meanwhile, older workers may already have paid off their loans, and as such should be offered a choice of whether to opt in, it said.
Contributions to start at lower point, will increase over the years
The CPF contribution rates will start at a lower point and increase gradually over the span of five years.
This is because immediately imposing the full CPF contribution rate may bring about "prohibitive increases in business costs" and resultant lower take-home salaries for workers, the committee said.
As such, it recommended that contribution rates increase by 2.5 per cent a year for platform workers, and 3.5 per cent a year for companies.
The end goal would be to match it to employee-employer contribution rates in other sectors, the committee said.
However, while workers' total earnings should increase due to the additional employer's contributions, their take-home pay may take a hit.
"To ease the impact, the government may wish to consider providing support for platform workers and the form of support this should take," the committee noted.
Costs may be passed on to consumers
Some of the increased cost will be passed on to consumers.
But market forces should pose a natural check to excessive fare hikes, said Senior Minister of State for Manpower Koh Poh Koon, who is advisor to the committee.
"Consumers exercising their power to choose will constrain any risk of the platforms trying to overprice. Drivers also choose platforms that offer them more work," he said according to The Straits Times.
The committee added that based on recent surveys, users of platform services are prepared to pay more if it means better protection for platform workers.
More than 20,000 platform workers and close to 2,700 platform users were engaged by the committee, reported CNA.
Gig workers were split almost evenly down the centre when asked if they were for or against making CPF contributions.
A total of 30 companies and associations, including foodpanda, RYDE, Gojek, and Ninjavan, were also consulted.
Top photo via Unsplash