Companies could shave salaries by snipping the variable pay portions such as bonuses, with management leading by example, said the council.

RELATED LINKS  NWC GUIDELINES

The council, which revised its annual guidelines to tackle the worsening economy, also called on companies to reduce non-wage costs too and urged the Government to help companies reduce business costs in next week's Budget.

In announcing the new guidelines on Friday, NWC chairman Lim Pin said they were sufficient for now to deal with the beleagured economy which took a sharp turn for the worse since the council's last recommendations in May.

It will meet again in April or May, as part of its traditional annual meeting, to take stock of the situation then and draw up relevant recommendations.

'Let's hope nothing too drastic happens then,' said Prof Lim Pin, indicating that more drastic measures could be taken if necessary.

He also revealed that the council had considered CPF cuts, but decided against it as it was a blunt tool that would affect workers in companies that were doing well too. Such a move would also have a long-term impact on workers' retirement savings.

The Government has accepted the NWC revised guidelines, saying it was 'timely' to cope with the financial crisis.

It comes at a time when Singapore, which slipped into a recession last year, had revised its growth forecast downwards this year. It is now expected to be between minus 2 per cent and 1 per cent.

Retrenchments, which are expected to rise this year, has started to climb 'significantly' in the fourth quarter last year, said the NWC, without elaborating.

The extent of the increase will be known by end of this month when the Manpower Ministry releases the numbers.

This is the third time in the NWC's 37-year history that it is issuing interim guidelines. It did so in 1998 during the Asian financial crisis and again in 2001, after the Sept 11 terrorist attacks on America.

Apart from wage cuts, the latest wage guideline also included a call for companies to tap on the new Government-sponsored training programme Spur, which gives employers more money to retrain, rather than retrench, workers.

The National Trades Union Congress supported the NWC guidelines, urging companies to cut other non-wage costs and retrench workers only as a last resort.

Also welcoming the guidelines was the Singapore National Employers? Federation, which noted that business costs had risen 8.9 per cent in the first nine months of last year.

Acting Manpower Minister Gan Kim Yong, speaking at a separate event on Friday, said: 'I hope companies will take the advice seriously and work together with us to manage this downturn. If we can manage effectively, I think we will be able to cut cost and save more jobs for our Singaporeans.'