Recovering firms should restore wage cuts: NWC

Employers that have recovered or are recovering from the fallout of Covid-19 should prioritise restoring workers' wage cuts and rolling back wage-related cost-saving measures such as temporary layoffs.

The National Wages Council (NWC) also said yesterday that businesses which are still struggling should consider non-wage cost-saving measures as far as possible and try to pay workers their annual wage supplement.

These businesses should continue to tap the Government's support measures for business and workforce transformation, retain employees through appropriate cost-saving measures and retrain and redeploy employees in affected business units to new jobs within the company.

But if they still face significant cost pressures and poor business prospects after exhausting these measures, they can implement temporary wage cuts to save jobs, said the tripartite group in updated guidelines that will apply from Dec 1 to Nov 30 next year.

They should seek unions' or employees' support, where applicable, in doing so.

The guidelines, which are not compulsory but have been accepted by the Government, come after the NWC, which comprises representatives from the Government, employers and unions, was convened last and this month.

They also come at a time when retrenchment numbers have fallen and the decline in the numbers of those employed has also slowed, the Ministry of Manpower (MOM) said in advance estimates yesterday.

In last year's set of guidelines, the council had set out key principles for implementing wage cuts, and had recommended freezing wages instead of cutting them for lower-wage workers.

Permanent Secretary for Manpower Aubeck Kam said during a press briefing yesterday that the tripartite partners have agreed it is timely to ease the "exceptional wage policies" put in place earlier, as the economy and the labour market gradually recover.

Since May this year, the global economic recovery has remained largely on track, notwithstanding the risks posed by Covid-19, the council noted. Barring a major setback in the global economy, the growth of outward-oriented sectors such as manufacturing will remain healthy, it added.

The Monetary Authority of Singapore, in its macroeconomic review released on Thursday, kept its 2021 forecast for Singapore's gross domestic product growth at 6 per cent to 7 per cent, and said expansion next year should be slower but still "above-trend".

The NWC said domestically, Singapore's vaccination programme has made good progress.

This will allow the progressive easing of domestic and border restrictions that could, in turn, help to support the recovery of consumer-facing sectors, such as food and beverage services, and alleviate labour shortages in sectors that are reliant on foreign employees, such as construction, it added.

But the council recognised that recovery will be uneven across sectors, with employers in the tourism and aviation-related sectors likely to see slower recovery.

It urged employers who have not yet implemented a flexible wage system to do so, especially those which have recovered or are recovering from the Covid-19 impact.

This can be done by introducing a monthly variable component on top of an annual variable component for more timely wage adjustments in response to changing business conditions.

Struggling businesses that wish to implement temporary wage cuts to minimise retrenchments should use such a system to utilise the range of flexibility provided for in the variable components of the wage structure, the council said.

Mr Kam said: "Covid-19 has also underscored the importance of greater resiliency in our wage system."

The flexible wage system will provide an agility to weather future downturns, he added.

The NWC also urged the Government, employers, unions and employees to take steps to transform jobs and upskill the workforce.

It recommended that all employers offer structured training for their employees, and work with employees to innovate and implement productivity initiatives, among other things.