The latest statistics from CPF board shows that the number of active businesses paying for employees’ CPF contribution continues to decline. At the close of 1Q (end Mar) of this year, the number has fallen to 150,186. It has been falling for more than 2 years since hitting a peak of 162,062 at the end of 2014.
The 7.3% decline from the peak 2 years ago is worrisome in view of the fact of government assurances that the our economy has been growing at 2.1% and 2% in 2015 and 2016 respectively. (Links: “Singapore economy grows 2.1% in 2015“, and “Singapore economy grows 2% in 2016, helped by strong Q4“)
Reasons for companies not paying CPF
In theory, if the GDP is growing, it would mean more businesses and hence, more employment, are being created for Singaporeans. But that is not the case here.
There are many reasons why companies are not paying CPF. One main reason of course, could be because more businesses are going bust.
This also means that the number of new businesses generated may not be catching up fast enough with respect to the number of businesses which are closing.
Another reason is that perhaps businesses are employing more foreigners since companies don’t have to pay CPF for foreign employees. So, in theory, if a company is employing 0 Singaporeans, it does not need to pay any CPF.
Whatever it is, the sign does not look good for Singaporeans.
Meanwhile, in its May Day message this month, PM Lee remains positive saying that Singapore may achieve a better economic growth this year compared to last year’s 2% growth.