“CUT COSTS TO SAVE JOBS”: SINGAPORE’S EXPERIENCE
Mr Lau Weng HongDeputy Director, Labour Relations
Labour Relations and Workplaces DivisionMinistry of Manpower
Singapore
• Impact of Global Economic Crisis on Singapore
• Response and Managing the Downturn
• Upturning the Downturn
• Conclusion
OverviewOverview
• Global stock markets plunged to new “lows”, unprecedented in the last 40 years
• Singapore economy contracted 6.8% in Q3 2008, 4.2% in Q4 2008, 9.4% in Q1 2009 and 3.2% in Q2 2009
• Singapore’s manufacturing sector faced with excess capacity due to sudden cancellation of business contracts / orders, leading to excess manpower
• Confidence shaken in badly hit global financial and banking systems
• Business travel “stagnated”
• Slower traffic of goods and services in the region
Impact of Global Economic Crisis on Singapore Impact of Global Economic Crisis on Singapore (Sep 2008 – Sep 2009) (Sep 2008 – Sep 2009)
Quarter 2008
Q2
2008
Q3
2008
Q4
2008 2009
Q1
2009
Q2
2009
Q3
2009
Q4
GDP 2.5 -6.8 -4.2 1.1% -9.4 -3.2 0.6 4.0
Source: Singapore Department of Statistics
GDP Forecast for 2009 Jan 09 : -5% to -2%Apr 09 : -9% to -6%Jul 09 : -6% to -4%Oct 09 : -2.5% to -2%GDP 2009 : - 2 %
Weak economic outlookWeak economic outlook
GDP growth declinedGDP growth declined
Unemployment rate roseUnemployment rate rose
Seasonally-adjusted unemployment rate, Jun 03 – Sep 09
Mar 09 Jun 09 Sep 09Overall: 3.3% Overall: 3.3% Overall: 3.4%Resident: 4.8% Resident: 4.6% Resident: 5.0%
Resident
Overall
Source: Labour Force Survey, MOM
Redundancies spiked in 1Q 09 Redundancies spiked in 1Q 09
Total Redundancies, Q3 05 – Q3 09
Figures may not add up due to rounding.Total redundancies refer to employees made redundant due to retrenchment or early termination of contracts.
Source: Labour Market Survey, MOM
Q305 Q405 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309
Total Redundancies 3,240 3,380 3,690 3,430 2,570 3,390 2,100 2,030 2,350 2,110 2,420 1,880 3,180 9,410 12,760 5,980 2,470
Early Release of Contract
Workers430 180 40 170 100 180 140 110 520 150 140 90 830 1,910 1,860 810 350
Retrenchment 2,810 3,200 3,650 3,260 2,470 3,220 1,960 1,920 1,830 1,970 2,270 1,800 2,350 7,500 10,900 5,170 2,110
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Early Release of Contract Workers
Retrenchment
Q1 09Total Redundancies: 12,760
Q2 09Total Redundancies: 5,980
Q3 09Total Redundancies: 2,470
Response and Managing the Downturn Response and Managing the Downturn
Tripartite Guidelines on Managing Excess
Manpower
Skills Programme for Upgrading and Resilience (SPUR)
Singapore National Wages Council Guidelines
Singapore Government’s Resilience Package
SGD $20.5 b
(about USD $15 b)
TRUST Teams
• Launched in Nov 08, revised in May 09, by the tripartite partners, i.e. Ministry of Manpower (MOM), National Trades Union Congress (NTUC) and Singapore National Employers Federation (SNEF)
• Guidelines adopt principles of:
– Spirit of equal sacrifice
– Leadership by example
– Close consultations and transparency
• TOP PRIORITY is to cut costs to save jobs
• Only carry out retrenchments as a LAST RESORT
Tripartite Guidelines on Managing Excess ManpowerTripartite Guidelines on Managing Excess Manpower
TRAINING
• Leverage on the Skills Programme for Upgrading and Resilience (SPUR)
– train & upgrade your employees’ skills
FLEXI-WORK
• Re-deploy your surplus employees to alternative areas of work within your company
• Implement shorter work week, temporary layoff, or other flexible work arrangements
FLEXI-WAGE
• Adjust wage cost using the flexible wage system (FWS)
• Make greater use of variable components – Annual Variable and Monthly Variable components
Key Areas of RecommendationsKey Areas of Recommendations
• In Jul 03, the Tripartite Taskforce on Wage Restructuring was formed
• 3 Key Recommendations:
1. Enlarge the Annual Variable Component (AVC) and identify Key Performance Indicators (KPIs) to link the AVC payment closely to performance
2. Introduce / Build up Monthly Variable Component (MVC) into the Basic Salary
3. Move away from seniority-based wage system by narrowing salary maximum-minimum ratio to 1.5 times or less
Background of Flexible Wage System (FWS)Background of Flexible Wage System (FWS)
When retrenchment is inevitable When retrenchment is inevitable
• Exercise should be implemented responsibly
• Inform MOM via 24/7 hotline, and consult union if unionised, i.e. give early notice
• Inform affected workers before notice of retrenchment is given
• Help affected workers look for alternative jobs
A tripartite programme to help employers and workers manage the economic downturn and build new capabilities to seize opportunities
for the economic recovery
Cut Costs, Save Jobs
Help companies
manage excess manpower and
reduce unemployment
/ under-employment
Reskill & Upskill
Help local workers
upgrade skills and convert to
new jobs
Build Capabilities for Recovery
Strengthen capabilities in labour market
and prepare for upturn
Skills Programme for Upgrading & Resilience Skills Programme for Upgrading & Resilience (SPUR)(SPUR)
2. Higher Absentee Payroll Cap
Absentee payroll of $4.00 and $4.50 / hr at all other approved providers
Aged 40 & above and with ‘A’ level quals and below
$10/hr
$4.50/hrBelow 40 years old
$10/hr
$4.00/hr
at SPUR providers
4.Industry
Upgrading
3. More Skills Upgrading Pathways
1. Higher Course Fee Subsidyfor SPUR courses
PMET level courses
90%
80% / 90%
90%
70%
SDF Funding at all other approved providers
SPURSPUR – for Employers – for Employers
• Basic InformationCommunication Technologies
• Certified Service Professional• Communication & Relationship
Management• Health & Workplace Safety .
• Initiative & Enterprise• Lifelong Learning Global
Mindset• Problem Solving & Decision
Making• Service Excellence• Self-Management Workplace-
Related Life Skills• Workplace Literacy &
Numeracy
• Aerospaceo WSQ Higher Certificate in Aerospace
Maintenance
• Chemicals / Petrochemicalso WSQ Process - operate furnace
• Electronicso WSQ Certified Mechatronic System
• Environment Technologyo Diploma in Technology (Water &
Environment)
• Food Manufacturingo Good Manufacturing Practices for Food
Manufacturing
• Generic Manufacturingo WSQ Certified Operations Specialist
• Pharmaceuticals/ Biologicso Specialist Diploma in Biotechnology
• Precision Engineeringo WSQ Specialist Diploma in Precision
Engineering
Generic SkillsGeneric Skills Sector SkillsSector Skills
SPURSPUR – Examples of Courses – Examples of Courses
Highlights of the Revised NWC Guidelines(16 Jan 2009 – 30 June 2009)
• Freeze / cut wages according to performance, prospects
• Make use of variable components in the wage structure
• Call for employers to adopt Tripartite Guidelines on Managing Excess Manpower and tap on SPUR
• Press On with Long Term Initiatives:– Enhancing employability of older workers and
women– Enhancing efforts to help low wage, contract
and informal workers
Role of the NWC in the downturn:Role of the NWC in the downturn:NWC ReconvenedNWC Reconvened
Recommendation:Employers, unions and the government press on with concerted actions recommended in NWC’s January 2009 guidelines to cut costs, save jobs and enhance competitiveness, through management leading by example in the following areas:
– Wage freeze or cut; – Implementation of other cost cutting measures and
initiatives to cope with the downturn; – Enhancement of wage flexibility; and– Improvement in productivity
NWC Guidelines 2009/2010NWC Guidelines 2009/2010(1 July 2009 – 30 June 2010)(1 July 2009 – 30 June 2010)
Flexible Wage System
• Jobs Credit – encourage businesses to preserve jobs as much as possible in the downturn– employers receive 12% cash grant on the first $2,500 of
each month’s wages for each employee, for a period of 1 year
– given in four quarterly payments in 2009: Mar, Jun, Sep and Dec
• Workfare Income Supplement (WIS) Special Payment - temporary top-up to help with lower wages
– giving low-income workers an additional 50% of the WIS payments received in the year
– relaxing work eligibility criteria
Jobs Credit & Workfare Income Supplement (WIS)Jobs Credit & Workfare Income Supplement (WIS)
TrTripartite ipartite UUpturn pturn StStrategy Teams rategy Teams (TRUST Teams)(TRUST Teams)
• Formed in end April 09
• Tripartite representation within TRUST Teams
• Engage companies on one-to-one basis to advise and guide companies on implementation of downturn measures under the Tripartite Guidelines on Managing Excess Manpower / SPUR
20/17 © 2009 Government of Singapore
Upturning the Downturn
21/17 © 2009 Government of Singapore
Positive signs of RecoveryPositive signs of Recovery
Quarter 2008
Q2
2008
Q3
2008
Q4
2009
Q1
2009
Q2
2009
Q3
2009
Q4
GDP 2.5 -6.8 -4.2 -9.4 -3.2 0.6 4.0%
GDP growth positiveGDP growth positive
GDP Forecast for 2009 Jan 09 : -5% to -2%Apr 09 : -9% to -6%Jul 09 : -6% to -4%Oct 09 : -2.5% to -2%
GDP for 2009 : - 2%
GDP Forecast for 2010
7% to 9%
MOM Survey on Measures to Cope with the DownturnMOM Survey on Measures to Cope with the Downturn
MOM Survey on Measures to Cope with the DownturnMOM Survey on Measures to Cope with the Downturn
MOM Survey on Measures to Cope with the DownturnMOM Survey on Measures to Cope with the Downturn
Performing well, 46%
Gradually recovering,
25%
29%
Unemployment rate fellUnemployment rate fell
Seasonally-adjusted unemployment rate, Dec 05 – Dec 09
Source: Labour Market Survey, MOM
Resident
Overall
Jun 09 Sep 09 Dec 09Overall: 3.3% Overall: 3.4% Overall: 2.1%Resident: 4.6% Resident: 5.0% Resident: 3.0%
Redundancies Fell from 2Q09Redundancies Fell from 2Q09
Total Redundancies, Q4 05 – Q4 09
Source: Labour Market Survey, MOM
Q2 09Total Redundancies: 5,980
Q3 09Total Redundancies: 2,470
Q4 09Total Redundancies: 2,220
Employment growth amidst downturnEmployment growth amidst downturnEmployment change by sector, Q4 05 – Q4 09
Source: Labour Market Survey, MOM
Q2 09 Q3 09 Q4 09Total: -7,700 Total: 14,000 Total: 37,500
• The Singapore Ministry of Trade and Industry reported exceptionally strong GDP growth at 13.1% in Q1 2010.
• Singapore also saw strong employment growth of 34,000 in Q1 2010, while the unemployment rate dipped to 2.2% in Mar 2010, and redundancies also fell to 2,100 in Q1 2010.
• Singapore continues to manage various manpower challenges:- Augmenting & upgrading our Local Workforce- Inclusive Growth- Ageing Workforce - Boosting Labour Productivity
Outcome of Tripartite EffortsOutcome of Tripartite Efforts
• Tripartite partnership has enabled Singapore to cope with the downturn effectively, as many companies implemented cost-cutting measures instead of cutting jobs.
• The measures have helped companies to cut costs and stay viable. Through the government’s special training programmes, many workers have also been able to undergo training in preparation for the upturn.
• The various cost-cutting measures implemented and the strong triparite partnership have enabled the economy to recover quickly, and benefited businesses, workers and the economy.
• Tripartite partnership is indeed an asset.
ConclusionConclusion
© 2008 Government of Singapore
Thank You