Percentage of Workforce Engaged under Contracts for Services

Er Dr Lee Bee Wah asked the Minister for Manpower (a) what percentage of our current workforce is engaged by companies under a contract for service; (b) whether there is an increasing trend of persons being engaged under contracts for services; and (c) given that CPF is not payable to persons engaged under a contract for service, what can be done to raise awareness to this group on the need to save for retirement.

As of June 2013, 8.1% of employed residents were own account workers. This is down somewhat from 8.9% in 2003. Own account workers operate their own business without employing anyone else, and are typically engaged on contracts for services. They are essentially their own employers.

Own account workers, like all self-employed workers, are required to contribute to their Medisave Account if they earn a yearly net trade income of more than $6,000, to ensure that they have sufficient Medisave savings for their healthcare needs. While it is not compulsory for them to contribute to the Ordinary and Special Accounts, they are encouraged to make voluntary contributions to save for retirement. Such contributions can qualify for tax relief, subject to a cap.

The Government encourages self-employed persons to contribute to their Central Provident Fund (CPF) accounts to cater to their retirement needs. We raise awareness through various channels such as annual mailers, media stories, outreach events and e-newsletters. We also provide support through measures such as the Workfare Income Supplement and Medisave top-ups. Industry associations and companies also play an important role in encouraging their self-employed persons to contribute to their Medisave. One example is the Drive-and-Save scheme implemented in 2011 where taxi companies make co-contributions towards taxi drivers’ Medisave accounts. We encourage more to do the same.

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