Report Highlights Potential Cost Increases and Impact on Platforms, Customers, and Merchants
Central Provident Fund (CPF) contributions for platform workers in Singapore could lead to a cost increase of US$368 million (S$494.3 million) over the next five years, according to a report by Momentum Works released on Nov 28, 2024. The cost estimate excludes other expenses such as workplace injury compensation (WIC) insurance, which is projected to reach US$32 million annually.
The CPF contribution scheme will be gradually implemented, starting at 3.5 per cent in 2025, increasing by 3.5 per cent annually until it reaches the prevailing rate of 17 per cent by 2029 for eligible workers. Workers will begin contributing at 12.1 per cent in 2025, eventually rising to 20 per cent.
The report indicates that platform operators, merchants, and customers will bear the brunt of these changes. If platforms pass the CPF costs onto customers, it could lead to a 2 per cent increase in customer payments. Merchants may experience a 2.5 per cent drop in revenue, while platforms could face a 40 per cent decline in revenue if they absorb the costs themselves.
These changes follow the Platform Workers Bill, which was introduced in August 2024 and is expected to take effect on January 1, 2025. This bill aims to offer more protection for platform workers, who were previously considered self-employed.
