Singapore

Trim non-wage costs before looking at pay cuts, NWC tells employers

Retrenchment should be last resort, National Wages Council tells employers

Employers affected by the Covid-19 outbreak 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 ever 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.

The NWC 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 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 workers who want to take on a second job if they have been affected by measures such as reduced working hours or temporary layoffs.

The Ministry of Manpower has uploaded a guide on second job arrangements on its website.

It states that workers may take on a second job unless their employment contract prohibits moonlighting or there is a conflict of interest.

In such cases, "employers are encouraged to waive contractual prohibitions against taking on a second job and help employees resolve conflicts of interest where possible, given that they initiated the reduced work hours and reduced salaries to save costs," the guide states.

"Employees should ensure they are able to take on both jobs without compromising the interests of each employer and be transparent in terms of the requirements of both jobs to their employers," the guide adds.

The Singapore National Employers Federation (Snef) said 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've 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.

The Government has accepted the NWC recommendations.

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