Industry Insights

Employers may cut wages for now to save jobs!

Posted on 29/10/2020 by Paula Formantes


With this being said, employees should be told how the wages will eventually be restored.

With the green light given by the National Wages Council (NWC) to implement temporary wage cuts, employers should seek employees’ support and make only the reductions necessary to minimize retrenchments as written in the updated guidelines from 1st November 2020 to 30th June 2021. These guidelines are not compulsory but have been accepted by the Government.

The recommended wage cut for employers to use was the annual and monthly variable components to adjust and cut basic pay only if necessary, to avoid retrenchments.

Adding to that, the employers should cut the wages of workers such that it cannot go below basic monthly pay of $1,400.

Sacrifices are required on the worker’s part, but employers should bear in mind their sacrifices when things get better by recognizing their efforts and rewarding them accordingly.

This move is to not only minimize retention rates but also to retain and redeploy existing workers. By retaining workers, it will keep them better prepared for when the demand recovers.

There will still be significant cost pressure and poor business prospects even with the stronger government support. But by working together to navigate the crisis as a country, Singapore will come out stronger- including our economy.

For consultation of wage cuts and job availabilities, please contact +65 6334 4328.