ARTICLE
NWC recommends concerted efforts to cut costs, save jobs
Channel NewsAsia - Thursday, June 4
SINGAPORE: Singapore’s tripartite National Wages Council (NWC) has urged employers, unions and the government to press on with concerted actions to cut costs, save jobs and enhance competitiveness.
It made the point when releasing its new set of wage guidelines to take effect from June 1, 2009, till June 30, 2010.
NWC’s chairman, Lim Pin, said Singapore needs to be prepared for the eventuality of a prolonged downturn, given the deep global recession, the uncertainty in the economic outlook coupled with the impact of a possible Influenza A(H1N1) pandemic.
The National Wages Council first met in January this year at the height of the downturn to issue a set of wage guidelines to tackle the recession. Four months later, despite the claims of green shoots by some economists, the council’s prognosis is not as optimistic.
"If you are talking about recovery, you have to ask one fundamental question — where is the recovery coming from? It (the recovery) will start a whole system of consumer confidence, of buying and trading. There is no sign of that yet.
"The decline has moderated, the downward slope is not that steep, but we haven’t plateaued as you will expect in a bottoming—out situation."
President of the Singapore National Employers Federation, Stephen Lee, said: "Looking forward, the business prospects continue to be weak. So businesses have taken a cautious approach and continue to manage their costs. This time, it is a drop in demand and it is a 20 to 30 per cent drop in revenue."
NWC has called on management to take the lead to implement a wage freeze or cut, implement other cost—cutting measures and initiatives to cope with the downturn and enhance wage flexibility and improve productivity.
President of the National Trades Union Congress (NTUC), John De Payva, said: "Bonuses will also be reduced by the end of the year. As far as workers are concerned, they are giving their companies, their employers full support."
For companies with excess manpower, the NWC said they can look at shorter work week, temporary layoffs, no—pay leave and other work arrangements as alternatives to retrenchments.
The Singapore government announced a S$20.5 billion package in the Budget this year. The NWC said both companies and workers have taken advantage of the Jobs Credit Scheme and the Skills Programme for Upgrading and Resilience to manage the downturn and to cut costs to save jobs.
But a key concern now is the drop in labour productivity growth in Singapore over the past four years. It has dropped from 1.9 per cent in the period 2001 to 2008 to minus 2.4 per cent during the period 2005 to 2008.
For companies which perform well, NWC has called on them to reward their workers with moderate wage increases. This can be in the form of variable payment, so that their long—term cost competitiveness will not be affected.
A taskforce led by the Manpower and Trade and Industry Ministries is working with industries on sectoral productivity issues.
On its part, Singapore’s labour movement said it is right to be cautious under the current economic situation.
He stressed that if cutting costs to save jobs now is stopped, retrenchments will go up. And if retraining workers and placing them into jobs is also stopped, then unemployment will rise.
Meanwhile, NTUC has also urged the government to continue helping companies reduce non—wage costs and have access to adequate credit.
— CNA/yt
EVALUATION
This article reveals a government failure on the part to implement new wage guidelines due to the failure to address the issues directly and plan for a long term. There is a failure to ensure sustained development which must ensure that the new wages guideline which aids the economy recovery must successfully help increase consumers' confidence. This is shown from "Four months later, despite the claims of green shoots by some economists, the council’s prognosis is not as optimistic."
There are also a few alternatives that the National Wage Council (NWC) proposes such as "For companies with excess manpower, the NWC said they can look at shorter work week, temporary layoffs, no—pay leave and other work arrangements as alternatives to retrenchments." Although this may sound like possible alternatives, but the government fails to consider what would happen to those in low income groups which are also likely to possess lower level of education. Temporary layoffs might be taken for granted and if the economy continues to go down, it's the most viable option to companies to lay off those already on temporary layoffs. And while they are in temporary layoffs, it is also difficult for them to find a job or whether to decide to find a job. In such an economic downturn, the jobs available are few and those on temporary layoffs will not be able to decide accordingly to find a job elsewhere as they might not be able to commit to the job.
At the same time, "The government has also urged companies and unions to work together to raise productivity by innovating, streamlining operations and strengthening workforce capabilities," this would mean increasing the expenditure of the companies on research and development. However in such a trying time of economic hardship, it would be best if the government would devote funds to subside companies so as to promote the incentive to invest in R&D.
As marked by the statistics, under the threat of a possible epidemic (Swine Flu), the demand curve for face masks has shifted to the right as denoted by the graph (from DD to DD1), as people are willing to take necessary precautions to reduce the probability of contracting the flu from sick individuals. As the threat of swine flu becomes more imminent, and the government steps in to promote the use of face masks, the demand curve is likely to continue shifting to the right (DD2). The suppliers, responding to the current trend of consumption, are likely to increase the supply of face masks. Moreover, due to the ease of production and short time taken in production, producers could easily adapt to this change in demand rapidly. In other words, the supply will increase as shown by the shift of the supply curve to the right (SS to SS1). The shift by both the demand and supply curves to the right will result in the increase in quantity of goods, with its price indeterminate. 
