Singapore companies prefer to save jobs

For most, retrenchment is a last resort when all other cost-cutting efforts fail, say national union, employers' federation and HR grouping.

SINGAPORE--Companies in the country are making a conscious effort to save jobs, say national organizations representing the country's employers, unionized workers and human resource practitioners.

Cham Huifong, industrial relations director at the National Trades Union Congress (NTUC), said: "By and large, our unionized companies are generally co-operative in [terms of] informing the unions when they meet with business difficulties, so that solutions such as cost-cutting measures can be worked out [in] ample time."

Some ways that companies in Singapore are trying to reduce costs include implementing shorter work weeks and unpaid leave.

Cham said in an e-mail, other measures comprise cutting travel and entertainment expenses, and canceling incidental events such as Family Day and annual Dinner & Dance celebrations. "Overtime has been reduced as well. Some companies with work orders are restructuring their working hours to optimize manpower without incurring overtime. Other companies practice a freeze on headcount and a reduction in wages."

"We do not know of companies which go directly into retrenching as a first measure. Feedback from companies shows that retrenchment is not a numbers game and that it is always a difficult exercise. There are many intangible issues involved such as the reputation of the company, staff morale and its ability to recruit when the market picks up."
-- Koh Juan Kiat
Singapore National Employers Federation

Koh Juan Kiat, executive director, Singapore National Employers Federation (SNEF), explained that headcount freeze and clearing of annual leave are common practices among companies as these efforts are less severe than others and easy to implement.

"Other measures such as non-renewal of contracts, wage freeze/cuts and shorter work weeks would come in if the companies continue to suffer sharp declines in business," he added in an e-mail interview.

David Ang, executive director of the Singapore Human Resources Institute (SHRI), said: "If a company has excess people with no work, it might [also] try to deploy them to other areas."

He added that the government's two initiatives--Jobs Credit and Skills Programme for Upgrading and Resilience (Spur)--have also encouraged multinational companies (MNCs), which are traditionally "fast in hiring and firing", to try and save jobs in Singapore.

Koh of SNEF noted the Jobs Credit scheme helps companies save, on average, 9 percent of the wage cost, which would otherwise be equivalent to cutting 9 percent of wages through retrenchments.

"All these schemes taken together have persuaded many employers to try to retain their employees," he said.

According to Cham, implementing cost-cutting measures before resorting to retrenchment enables companies to maintain their skilled workers, as organizations realize that when the economy recovers, it will be competitive to recruit such workers.

Koh agreed that they would need to hire again when the business climate improves. "Companies would also already have invested a lot to train their workers to do their jobs. If they release their workers too early, they might find it difficult to recruit skilled employees later when the market picks up."

Furthermore, if companies use the lull period to train their workers and tap on Spur, they can position themselves better to exploit opportunities for growth.

Last but not least, there is always a staff morale issue, said Koh. "If the companies are not responsible in managing excess manpower, this will affect staff morale all round."

Keeping communication lines open
Ang pointed out that good communications between employers and their employees during the current downturn would help companies in Singapore when the economy turns around. He explained that for the sake of better relations, a company must seek the understanding of its employees for the actions it takes which affect them.

The SHRI encourages companies to inform their employees of the current state of their businesses, and to let them know through their respective HR departments the actions undertaken by their firms. This makes it easier for employers to gain the mandate from their workers.

Despite the best efforts, Ang said a company which continues "bleeding" must "bite the bullet" and "let employees go". Even so, it could try to maintain permanent staff and release contract and part-time workers first.

Cham cautioned that companies which have lost their major customers and do not foresee any immediate recovery, may have no choice but to resort to retrenchment, even despite having tried to restructure their businesses.