Economists say NWC should address wage reduction in current economic climate

Economists say NWC should address wage reduction in current economic climate
By S.Ramesh, Channel NewsAsia | Posted: 07 January 2009 1820 hrs

SINGAPORE: Economic watchers are expecting the National Wages Council (NWC) to address the issue of salary cuts to brace for the current difficult economic times.

Channel NewsAsia understands from employer and union representatives that the council which was reconvened recently met again on Wednesday. Its revised guidelines are expected next week.

The last time the NWC recommended a wage cut to save jobs was in 2003 during the SARS period.

In 2003, the NWC proposed that in view of the severe impact of SARS on the economy, companies directly affected by the outbreak implement appropriate wage cuts to survive the downturn and to save jobs.

Economic watchers said the time has come for the NWC to revisit this need for companies to survive and save jobs.

Dr Tim Phillippi, executive director, Singaporean-German Chamber of Industry and Commerce, said: "When it comes to workforce and flexibility, what would be helpful would be flexibility with regard to work time during the week. Also, for companies, if it is necessary, the flexibility with regard to temporary pay cuts and temporary layoffs. With measures like these, companies would be prepared for the times after the crisis."

Veteran Parliamentarian Inderjit Singh feels all is possible without affecting the CPF rates.

He said the CPF rates are currently at an appropriate level, just enough for retirement savings.

Mr Inderjit said: "Let’s not jump on this bandwagon for CPF cuts at this point in time because by cutting CPF, we will create a whole series of other problems. We know we need to save for retirement. As it is, it is not enough and I wouldn't want to use this tool so easily unless we have no other choice and it is one of last resort.

“I am quite sure that through the modifying of salaries and the restructuring of the salaries to have variable components, this is the time to do it and we will be able to manage without having to cut CPF at this time."

A union leader in the electronics industry hopes the recommendations will help turn the sector around.

Cyrille Tan, general secretary, United Workers of Electronic and Electrical Industries, said: "It is a very difficult period within the manufacturing sector and orders are down and many workers are without jobs. We hope that with SPUR and many other programmes coming in, employers within the sector will not go to retrenchment as a first resort, but try to give every worker a chance to go for retraining."

Singaporeans would have to prepare themselves for several announcements about jobs, wages and the economy over the next two weeks.

Channel NewsAsia understands that the NWC’s revised wage guidelines are scheduled to be announced on the Jan 16. The Trade and Industry Ministry is likely to give a fuller picture of last year's economic performance just before Budget Day on Jan 22. - CNA/vm

Source: http://www.channelnewsasia.com/stories/singaporelocalnews/view/400814/1/.html