23 Sep 2020

 Maintain Capacity and Build Capabilities

The Singapore National Employers Federation (SNEF) strongly supports the addendum to the National Wages Council (NWC) 2020/21 Guidelines. SNEF urges employers to adopt the recommendations to maintain their capacity and build capabilities for eventual business recovery.

2. When the NWC Guidelines was released in 30 March, the impact of COVID-19 was not keenly felt yet and the Singapore economy was projected to contract by one to four percent. Since then, the projection has been revised to minus five to seven percent.

3. The pandemic, which is unprecedented in scale, has presented immense challenges for the economy as well as the society at large. Singapore will need a collective response from all sectors to display solidarity, responsibility and responsiveness to ride through this tough period together.

4. The Ministry of Trade and Industry has projected that the Singapore economy would contract by one to four per cent this year. Hence, the overriding priority is to ensure business survival through cost reduction. Notwithstanding this, employers should make use of the downtime to retrain workers and restructure their businesses to be better prepared for the economic rebound.

Reduce Costs, Take Balanced, Measured and Graduated Approach

6. As business demand has plummeted, especially in the service and tourism-related industries, many employers have acted swiftly to reduce non-wage costs drastically to sustain their businesses. The magnitude of the decline means that cutting non-wage costs alone has not been sufficient for some employers to stay afloat. Hence, SNEF supports the NWC recommendation for employers that have been adversely impacted by COVID-19 to reduce their wage cost.

7. The Federation urges employers to take a balanced, measured and graduated approach in reducing wages with management taking the lead by taking deeper and/or earlier wage cuts. On this front, senior management in many companies have already taken the lead in taking significant wage cuts.

8. The monthly variable component (MVC) was introduced in 1999, following the 1998 Asian Financial Crisis to help employers adjust wages costs more quickly to respond to business downturns. However, after more than 20 years, only 11.3%[1] of employers have implemented it. Most of those which have not implemented the MVC are SMEs which do not have the HR resources to do it. Hence, SNEF supports the recommendation for employers which have not implemented the MVC to treat any cut in basic wages as an MVC cut. They should also set guidelines on restoring the cut when their business recovers and allocate this as the MVC thereafter.

Low-Wage Workers

9. Even as companies seek to reduce their costs, the Federation supports the special consideration given to low-wage workers, especially those serving in the front line of COVID response. The ex-gratia payment recommended for these workers would be a small gesture from employers as they have been working tirelessly to keep Singapore clean and safe.

10. The Federation also supports the recommendation for employers to give a built-in wage increase of up to $50 for low-wage workers earning a basic monthly wage of up to $1,400. This and the ex-gratia payment would help supplement their wages.

11. At the same time, SNEF noted that the Cleaning, Security and Landscaping sectors have already set in place plans to raise wages under their Progressive Wage Models (PWMs). Should employers in these sectors be unable to afford the recommended wage increases, they should raise the matter and open discussions with their unions.

Adopt the Tripartite Advisory on Excess Manpower, Retrench as Last Resort

12. Employers should adopt the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment. They should leverage and make full use of the support measures announced by the Government and take the opportunity during the downtime to send their workers for training, so that their workforce is better prepared for the upswing. Employers can benefit from the wage support for employees on training and upgrade their workers’ capabilities to support business transformation.

13. With the Government funding up to 75% of the wages of workers in the most-affected sectors through the enhanced and extended Jobs Support Scheme, there is substantial support for employers to retain their workers. Where retrenchment is still inevitable, employers should provide the necessary assistance to affected workers, including outplacements.

Restructure Businesses, Press on With Productivity Improvements

14. The Federation also urges employers to plan for business continuity in the event of a prolonged crisis. In particular, they need to adopt flexible work arrangements more aggressively to allow for split teams, and working from home so that workers’ wages and business operations are not significantly affected.

15. SNEF noted that productivity had declined by 0.8% in 2019, the lowest in a decade after nine years of consecutive growth. Productivity is still the only way to raise wages sustainably and we must not lose sight of this fact as we battle the pandemic. Hence, we must press on with business transformation and skills upgrading.

16. Employers, especially the small and medium-sized, are strongly encouraged to tap on assistance schemes such as the SME Go Digital Programme, Productivity Solutions Grant and Enterprise Development Grant to accelerate digitalisation, job redesign and transformation of their business before the enhancements end in December 2020.

Concluding Remarks

17. Said Dr Robert Yap, President, SNEF, “Since the outbreak of COVID-19, the tripartite partners have been working very closely to tackle the crisis. This set of NWC recommendations, together with the two support packages announced by the Government, would help employers cut costs, save jobs, and build up our workforce capabilities for the economic rebound. I urge employers to fully adopt the NWC guidelines and leverage all the government assistance programmes to overcome their challenges and ride through this crisis.

18. I would also like to express our profound appreciation for the hard work, dedication and sacrifices of all workers who are helping to fight COVID-19, both in and behind the front line to keep Singapore clean and safe.

19. Finally, the tripartite partners will do all we can to help employers and workers through this. We must all play our part, forge a stronger sense of corporate and social responsibility and stay united as we overcome this crisis together.”

About Singapore National Employers Federation

The Singapore National Employers Federation (SNEF) is a trade union of employers. Our mission is to advance tripartism and enhance labour market flexibility to enable employers to implement responsible employment practices for sustainable growth. SNEF has a membership of over 3,300 companies with a combined workforce of over 800,000. For more information, please visit www.snef.org.sg

[1] Source: Report on Wage Practices, 2018, Ministry of Manpower