Tap govt support, trim other costs before pay cuts: NWC

Council tells employers retrenchment should be a last resort and those doing it must be fair

Singtel also said it had raised $2 million from its staff to help vulnerable groups and healthcare workers.
Singtel also said it had raised $2 million from its staff to help vulnerable groups and healthcare workers.ST PHOTO: KUA CHEE SIONG

Employers affected by the Covid-19 pandemic should first reduce non-wage costs and tap government support before looking to reduce their workers' wages.

Retrenchment should be a last resort, said the National Wages Council (NWC), in releasing its annual guidelines yesterday. And employers doing so should ensure they conduct the exercise fairly and in accordance with the tripartite advisory on managing excess manpower and responsible retrenchment which was updated earlier this month.

The council's guidelines, made ahead of the usual schedule this year, come as unemployment is expected to rise as Singapore's economy heads into what could be its worst annual contraction.

The Monetary Authority of Singapore eased monetary policy yesterday and said that it expects increasing job losses and slower wage growth amid a recession this year.

It has set the Singapore dollar's rate of appreciation at 0 per cent and effectively lowered the mid-point of its currency band to allow for a weaker currency and spur export-driven growth.

The NWC yesterday made recommendations on the key considerations employers should bear in mind if they have to cut pay in order to save jobs. Management should lead by example, and they should try as far as possible to still pay the annual wage supplement, or 13th-month bonus.

Special consideration should be given to low-wage workers earning a basic monthly wage of up to $1,400.

The council also called on employers to support local staff who want to take on a second job to supplement their income if they have been affected by measures such as reduced working hours or temporary layoffs due to the coronavirus outbreak.

The Singapore National Employers Federation (SNEF) said that it supports the recommendation for employers who have been adversely affected by the virus to reduce their wage costs, but urged them to do so in a balanced, measured and graduated approach. "The magnitude of the decline means that cutting non-wage costs alone has not been sufficient for some employers to stay afloat," it said.

The council gave other guidelines on reducing non-wage costs, managing excess manpower, and pressing on with business and workforce transformation.

For example, employers can use the excess time to bring forward planned training for workers, and redesign jobs to improve productivity.


SNEF president Robert Yap, a council member, called on fellow bosses to look for opportunities presented by the crisis.

"We should look at how we can use this opportunity to do a lot of things that we have been trying to do. For example, flexible work, productivity, innovation, how do we cut costs, how do we create that kind of habit that we work actually in a more digital manner," he said.

Fellow council member Mary Liew, who is president of the National Trades Union Congress, said that during the negotiations, NTUC had advocated for special attention to be paid to low-wage workers, including giving an ex-gratia payment to those who stepped up to assist employers during this challenging period, and she was glad that this was part of the recommendations.

The Government has accepted the NWC's recommendations.

Manpower Minister Josephine Teo said in a statement on this year's guidelines that they outline clearly what workers should expect from their employers.

She added that the ability of the council to agree on the guidelines under a compressed timeline - it typically meets in April and May, and releases recommendations at the end of May - shows the strength of tripartism in Singapore.

"In good times, we share the gains. In times of crisis, we share the pain - each making mutual sacrifices to sustain businesses and save jobs," she said.

A version of this article appeared in the print edition of The Straits Times on March 31, 2020, with the headline 'Tap govt support, trim other costs before pay cuts: NWC'. Subscribe