Employer contributed CPF rightfully belongs to employees

The notion that employer contributed CPF isn’t our money is essentially a false one.

Many jobs in the market today are open to foreigner competition including jobs in government linked companies. Suppose a foreigner and a local with similar qualifications, experiences and interview performances compete for the same job. If the foreigner asks for $4,800 in cash and nothing else while the local asks for $4,800 gross + employer contributed CPF of say $960 for a total sum of $5,760, the foreigner will end up getting the job because he is cheaper, the local will end up losing the job because he is more expensive when employer CPF is included. In this case, employer CPF is a bane, not a boon to locals.

In order for the local to not lose out, he will have to lower his gross to $4,000 so that his gross + employer CPF of $800 = $4,800 is exactly the same as that demanded by the foreigner. In which case, the $800 employer CPF isn’t some unmerited gift that the local receives on top of his gross but that part of his original asking that he has to forgo so that his final total salary including employer CPF stays competitive when compared to that of a foreigner.

Even for public sector jobs that foreigners are restricted from, pegging is usually done to the private sector. This means that all else being the same, a public sector hirer only needs to pay $4,000 gross to someone who would similarly have gotten $4,000 gross in the private sector. The public sector employee will end up being in the same situation of having to lower his asking from $4,800 to $4,000 because that is all the public sector hirer has to pay to match his or her private sector counterpart. So in the same token, the public sector employee’s $800 employer CPF isn’t some unmerited amount that he receives on top of his gross but that part of his asking that he has to forgo in order that his gross + employer CPF can match those in the private sector.

To conclude, all else being the same, employer CPF isn’t some unmerited, free money that employees receive on top of their gross salary. Employer CPF is the amount by which an employee’s gross salary has to be depressed in order that his gross + employer CPF can stay competitive compared to the amount asked by a foreigner or paid in the private sector.

The only situation where employer CPF becomes free money is when an employee who is not on CPF is suddenly given CPF without any reduction in his gross. But still in this case, the take home will be reduced and this has been known to turn off some employees.

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