WAGES - Ashleen

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.

Prof Lim said: "These are isolated and individual predictions. They are not based on solid concrete data of sustained improvement. Whether we are bottoming out or something is a little bit far—fetched to extrapolate from whatever optimistic comments you have heard.

"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.

Manpower Ministry’s Permanent Secretary, Leo Yip, said: "And here you are talking about the business model, service delivery processes, benchmarking of standards of the value creation, so all these are being looked at."

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.

The Singapore government has accepted the NWC wage guidelines for 2009/2010, and supports NWC’s call to use this downturn to strengthen Singapore’s competitiveness and prepare for the upturn.

A taskforce led by the Manpower and Trade and Industry Ministries is working with industries on sectoral productivity issues.

The government has also urged companies and unions to work together to raise productivity by innovating, streamlining operations and strengthening workforce capabilities.

On its part, Singapore’s labour movement said it is right to be cautious under the current economic situation.

NTUC’s deputy secretary—general, Heng Chee How, said in a statement that the tripartite partners must stay the course to save jobs for workers and prepare for the economic upturn.
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.