Singapore backs severe wage cuts
( 2001-12-08 14:15) (7)
Singapore's National Wages Council (NWC) on Saturday issued new labour guidelines backing "severe" pay cuts to help companies ride out the city-state's worst recession in 36 years.
However, the council urged employers to consider retrenchments only as a last resort with the number of people losing their jobs expected to reach 25,000 this year.
Council chairman Lim Pin said that cuts in employers' contributions to a state-administered pension fund, which still has to be fully restored after being slashed during the 1997-1998 Asian financial crisis, "cannot be ruled out" but would only be done in extremis.
"Given the worsening economic conditions and the increasing number of workers being retrenched, the NWC strongly urges the government, employers and trade unions to take concerted actions to save jobs," the council said in its latest report.
It recommended that "for the majority whose business profitability or prospects are adversely affected by the severe economic downturn, they may, in consultation with their unions/workers, implement a wage freeze or cut commensurate with their performance and prospects."
Companies that were still doing well "should reward their workers with appropriate wage increases" and should not use the economic slump as an excuse to cut salaries and other benefits, the council said.
"Effective implementation of the above severe wage restraint guidelines will save jobs and control wage costs, to help companies remain viable and the economy to cope with the recession."
The council also "strongly urged" the public sector to continue to keep other overheads down and called on companies to be transparent when advising workers of the corporate financial position.
The guidelines are expected be gazetted under the employment act and become an official document that would be the basis for the ministry of manpower, as well as arbitration courts, to settle labour disputes.
Disruptive strikes are unheard of in Singapore, a modern regional financial centre and commercial hub, where the National Trades Union Congress is a cooperative partner of the government and the private sector.
Singapore's economy has fallen into its worst recession since independence in 1965, facing a 3.0 percent contraction in its gross domestic product this year. GDP is forecast at between minus 2.0 and positive 2.0 percent next year.
Trade-dependent Singapore has been hit by the slowdown in the United States, compounded by the aftermath of September 11, and the slump in global demand for electronics -- its main export.
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