The National Wages Council (NWC) said today (Oct. 16) that companies that have exhausted their cost-cutting measures should introduce temporary wage cuts to minimize cuts.
The tripartite group said wage cuts should depend on the company's performance and prospects, as well as the industry in which it operates.
Businesses should also reach out to employees before implementing the wage cuts and only make cuts if necessary to prevent cuts.
Employees should also be informed about how wages will ultimately be restored, and management should lead by example and make earlier and deeper wage cuts.
Preserve companies and save jobs
Image Credit: AccTrust Recruitment
The updated guidelines apply from November 1st through June 30th next year.
The guidelines have been updated to keep businesses alive and minimize cutbacks.
Although the guidelines are not binding, they were accepted by the government after the Council met for the second time this year.
NWC is made up of representatives from companies, trade unions, and the government and typically meets once a year. However, given the difficult economic situation, a second meeting was held.
Mary Liew, president of the National Trade Union Congress, said that "more drastic, immediate action" is needed after efforts to retain and redeploy existing workers are exhausted.
Guidelines for wage cuts
When implementing wage cuts, employers should use the flexible wage system.
A flexible wage has a significant variable component that enables companies to adjust wages quickly in the event of a severe economic downturn.
Under the system, variable components should make up 30 percent of the annual wage package for ordinary employees, 40 percent for middle management and 50 percent for senior management.
However, the Council has not set a quantum for wages.
In addition, the Council called for special consideration to be given to low-wage workers. Employers should introduce a wage freeze for employees who earn a basic monthly wage of S $ 1,400 or less.
"There was a lot of give and take and, above all, a lot of trust among the tripartite partners in order to find solutions that are best suited not only for companies but also for employees," said Chairman of the Council, Peter Seah.
Selected image source: Investvine