Employers urged to take long-term view of manpower needs

Pay cuts and retrenchment should not be Singapore companies’ first course of action in dealing with COVID-19, said the National Wages Council.
By: | April 1, 2020
Topics: News | Singapore

While Singapore companies continue to manage the immediate economic fallout from the COVID-19 outbreak, they should also move to accelerate the implementation of business and workforce transformation initiatives. This, said Singapore’s National Wages Council (NWC), will allow companies to gain a competitive advantage and be better prepared to grow when the economy recovers.

Employers are encouraged to tap on government support schemes to implement measures such as developing training plans that meet employees’ current and future requirements, redesign jobs and train employees for new job functions, and invest in training all employees in emerging skills, so that they continue to be employable and are not at risk of redundancy.

Speaking while releasing its annual wage guidelines, the NWC also urged employers to refrain from taking measures such as wage reduction and retrenchment, unless necessary. “When wage reductions are necessary, employers should adopt a graduated approach, with deeper reductions at the management level and for higher-wage employees to effect the desired extent of reduction in total wage cost,” said the NWC.

Highlighting that any reduction of wages should be applied to local and foreign employees fairly, the NWC also encouraged employers, if possible, to pay out the annual wage supplement, or the 13th month bonus, as recognition for employees and to retain them.

For employees with a monthly variable component (MVC), employers can adjust it downwards, with the amount depending on the employer’s situation and key performance indicators. Companies that have not implemented MVC are recommended by the NWC to consider basic wage cuts of up to 10%.

With Singapore’s economy contracting by 2.2% year-on-year in the first quarter, and GDP growth forecast for the year to be between -4% and -1%, the NWC acknowledged that retrenchment of workers will be inevitable for some companies. In such instances, companies are advised to notify both the government and unions in advance of implementation, and to make suitable efforts to help affected employees look for alternative jobs in associate companies.

“The NWC calls on employers, unions and workers, and the government to stay united and work together, to mitigate the impact of COVID-19 and position Singapore for eventual recovery,” the NWC concluded.