In order to minimise layoffs, Singapore’s National Wages Council said employers should seek employees’ support to implement temporary wage cuts to the extent needed to minimise dismissals.

The Council added that employers may do this if they have already exhausted non-wage cost-saving measures and government support and still face significant cost pressures and poor business prospects amid the coronavirus crisis.

The guidelines, which are not compulsory, will apply from 1 November 2020 to 30 June 2021.

“The wage cuts should depend on the sector and company’s performance and outlook,” the council added. “In the spirit of solidarity, the burden of wage cuts should not fall excessively on any one group. At the same time, management should lead by example and employers should consider varying wage cuts to take into account the ability to cope with such cuts at different salary tiers, while keeping the extent of cuts bearable for all employees. Wage cuts accepted in good faith by employees should also be restored when business conditions allow.”

“Retrenchment (layoffs) should be a last resort for employers who continue to have a viable business plan post-Covid-19,” the Council stated. “It should be considered only after exhausting other options such as retaining employees in critical capability areas, or retraining and redeploying employees to new jobs in restructured business units.”

The Ministry of Trade & Industry expects the Singapore economy to contract by 5.0% to 7.0% for 2020 as a whole, adding that consequently, softness in the labour market is likely to persist with continued weakness in hiring and pressure on companies to retrench.