Industrial Relations

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1) Tripartite Guidelines on Managing Excess Manpower

The ‘Tripartite Guidelines on Managing Excess Manpower’ aims to help employers and workers to better manage the economic downturn and at the same time reposition the workforce to seize opportunities when the economy recovers. Under the guidelines, companies are encouraged to consider retrenchment only as a last resort. Instead, they should consider alternative measures such as spending people for training under Skills Programme for Upgrading and Resilience (SPUR), making use of job credit scheme to reduce wage cost, redeploying workers to alternative areas of work within the company, implementing shorter work– week, flexible working schedule or using flexible wage system to cut cost.

Under the Jobs Credit Scheme, the Government helps employers with their wage bills by giving a 12% cash grant on the first $2,500 of wages to keep local workers on their payroll. This was seen as a big help and encouraged many companies to save jobs in the downturn. SATS, for instance, received a Jobs Credit grant of $12.3 million in the first disbursements under the Jobs Credit scheme, which helped trim staff costs by 9.7 per cent. Other companies which mentioned Job Credit Scheme one of the factors that helped defray staff costs, or mitigate a rise in operating expenses included MobileOne, SingPost and Banyan Tree Holdings[3].

Besides, in order to accommodate broader wage policies, The National Wages Council (NWC), which is made up of representatives from the public sector, unions and employer groups also released the NWC’s wage guidelines in view of the impact of the crisis. The guidelines recommend some measures for companies to cut costs to save jobs such as wage freezes or cuts, wage flexibility where employers are encouraged to adopt more flexible wages by converting up to 10% of an employee’s basic wage into Monthly Variable Component (MVC) or by enlarging the (MVC), cutting on Annual Wage Supplement (AWS), variable bonus or annual wage increment.

The Government also set up a 24/7 managing-excess-manpower hotline which companies can call for advice on the implementation of downturn measures, or to notify the MOM that that they are considering retrenchment.

The guidelines have proven to be effectively cascaded down and adopted by many organizations. According to a SNEF survey of 160 companies in December 2008, more than half indicated they would resort to flexible work arrangements to stave off retrenchments. And 56 per cent of the companies surveyed said they would manage their cost aggressively[4]. From January to March 2009, a total of 68 unionized companies and 23,914 workers had gone through shorter work weeks or temporary lay-offs in line with the Tripartite Guidelines[5].

One example of organization that stepped up to tripartite’s call to manage their excess of manpower during economic crisis in 2009 is Singapore’s main newspaper publisher, Singapore Press Holdings Limited (SPH). SPH had taken several cost cutting measures including freezing pay for senior management, reduction in profit-related bonuses, a hiring freeze and slashing of operating expenses. When the economy worsened, in response to the sharp deterioration in business condition, instead of retrenchment, in Mar 2009, they announced further cost cutting after discussions with the SPH Employees’ Union (SPHEU).

About 3,000 employees were taking cuts, ranging from 2 to 10 per cent with the higher paid employees bearing the brunt of these cuts, with effect from 1 April 2009. As compensation, the company will grant 1-day Special Leave for every 2 per cent pay cut. SPHEU had also proposed, and the management agreed, to do away with the annual family day and dinner and dance as cost-saving measures.

During negotiations, the union’s biggest concern was for the group of lower-income workers, especially those with families and young children as this group would be most adversely affected. With understanding and collaboration between union and employer, the company agreed not to implement any wage reduction for employees earning $2,000 a month and below.

Besides, SPH has implemented wage restructuring in year 2009, instead of giving Annual Increment as part of basic pay, the company gives Special Variable Payment (SVP). The company also cut its Variable Bonus Payment in order to further reduce its wage costs.

Similarly, CapitaLand also took step to cut cost to avoid staff retrenchments in early 2009. Leading by example, the management accepted a higher salary reduction, ranging from 3 per cent to 20 per cent. This had helped to build trust among staff and enable the company to perform well in spite of the crisis.

And later in response to the improvement of economy, most companies also took initiative to restore wage cut and reward workers for their sacrifices during the downturn. For instance, when SPH recovered from downturn in 2010, they review the cost-cutting measures, in consultation with its union; they have given one-off special payment which is equivalent to 50% of each employee’s pay cut quantum in 2009 plus a further sum of $250. In addition, they also have given 50% pay restoration effective from Jan 2010. CapitaLand was also among the first few companies that decided to restore the salary of its executive in late 2009.

Another example is Media giant MediaCorp, who adopted alternate short weeks with staff taking block leave to cut operating costs. According to MediaCorp CEO Lucas Chow, these cost cutting measures helped the company weather the economic storm, without having to resort to retrenchments at this stage. With the shorter 4-day week that will alternate with the regular 5-day work week starting from April 2009, the company expected to see a reduction of about 10 per cent in its annual wage bill.

They also saved operating costs from common leave taken across the group – except those manning 24 by 7 services such as news, broadcast transmission, live radio and advertisement bookings. The alternate short week and common leave will be scheduled around public holidays and school vacations, resulting in some breaks lasting up to a week. This break will enable MediaCorp to carry out equipment and facility maintenance. The company’s in-house union had provided input on the scheduled shutdowns. Mr Ang Wah Lai, President of Singapore Union of Broadcasting Employees (SUBE), said: “Our employees understand it’s a necessary step to save jobs. I am glad to have been consulted early, and the early notice of the scheduled shutdowns allows staff to plan their personal commitments. “I really appreciate the level of trust and openness between the union and management.” (Wei Wei, please