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“CUT COSTS TO SAVE JOBS”:
SINGAPORE’S EXPERIENCE
Mr Lau Weng Hong
Deputy Director, Labour Relations
Labour Relations and Workplaces Division
Ministry of Manpower
Singapore
Overview
• Impact of Global Economic Crisis on
Singapore
• Response and Managing the Downturn
• Upturning the Downturn
• Conclusion
Impact of Global Economic Crisis on Singapore
(Sep 2008 – Sep 2009)
•
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
Weak economic outlook
GDP growth declined
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 %
Unemployment rate rose
Unemployment Rate (Seasonally Adjusted)
Seasonally-adjusted unemployment rate, Jun 03 – Sep 09
7.0
Mar 09
Overall: 3.3%
Resident: 4.8%
6.0
Jun 09
Overall: 3.3%
Resident: 4.6%
Sep 09
Overall: 3.4%
Resident: 5.0%
Resident
5.0
4.0
Overall
%
3.0
2.0
1.0
0.0
J03 S03 D03 M04 J04 S04 D04 M05 J05 S05 D05 M06 J06 S06 D06 M07 J07 S07 D07 M08 J08 S08 D08 M09 J09 S09
Overall
3.6
4.8
3.9
3.7
3.6
3.0
3.2
3.2
3.4
3.3
2.6
2.5
2.7
2.8
2.7
2.7
2.3
1.7
1.7
1.9
2.2
2.3
2.5
3.3
3.3
3.4
Resident 4.7
6.2
5.2
4.9
4.7
4.0
4.2
4.2
4.4
4.4
3.5
3.3
3.5
3.8
3.7
3.8
3.1
2.5
2.4
2.8
3.1
3.4
3.6
4.8
4.6
5.0
Source: Labour Force Survey, MOM
Redundancies spiked in 1Q 09
Total Redundancies, Q3 05 – Q3 09
Q1 09
Total Redundancies: 12,760
14,000
12,000
Retrenchment
Early Release
of Contract
Workers
10,000
8,000
Q2 09
Total Redundancies: 5,980
Q3 09
Total Redundancies: 2,470
6,000
4,000
2,000
0
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
Workers
430
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
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
Response and Managing the Downturn
TRUST Teams
Singapore National Wages
Council Guidelines
Tripartite Guidelines
on Managing Excess
Manpower
Skills Programme
for Upgrading and
Resilience (SPUR)
Singapore Government’s Resilience Package
SGD $20.5 b
(about USD $15 b)
Tripartite Guidelines on Managing Excess Manpower
•
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
Key Areas of Recommendations
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
Background of Flexible Wage System (FWS)
•
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
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
Skills Programme for Upgrading & Resilience (SPUR)
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
Reskill &
Upskill
Help
companies
manage excess
manpower and
reduce
unemployment
/ underemployment
Help local
workers
upgrade skills
and convert to
new jobs
Build
Capabilities
for Recovery
Strengthen
capabilities in
labour market
and prepare for
upturn
SPUR – for Employers
1. Higher Course Fee Subsidy
for SPUR courses
90%
90%
PMET level
courses
SDF Funding at all other approved providers
80% / 90%
3.
More Skills
Upgrading
Pathways
70%
2. Higher Absentee Payroll Cap
at SPUR providers
$10/hr
$10/hr
Below 40
years old
$4.00/hr
Aged 40 & above
and with ‘A’ level
quals and below
$4.50/hr
Absentee payroll of $4.00 and $4.50 / hr at all other approved providers
4.
Industry
Upgrading
SPUR – Examples of Courses
• Basic Information
Communication Technologies
• Certified Service Professional
• Communication &
Relationship Management
• Health & Workplace Safety .
• Initiative & Enterprise
• Lifelong Learning Global
Mindset
• Problem Solving & Decision
Making
• Service Excellence
• Self-Management WorkplaceRelated Life Skills
• Workplace Literacy &
Numeracy
Generic Skills
• Aerospace
o
WSQ Higher Certificate in Aerospace
Maintenance
• Chemicals / Petrochemicals
o
WSQ Process - operate furnace
• Electronics
o
WSQ Certified Mechatronic System
• Environment Technology
o
Diploma in Technology (Water &
Environment)
• Food Manufacturing
o
Good Manufacturing Practices for Food
Manufacturing
• Generic Manufacturing
o
WSQ Certified Operations Specialist
• Pharmaceuticals/ Biologics
o
Specialist Diploma in Biotechnology
• Precision Engineering
o
WSQ Specialist Diploma in Precision
Engineering
Sector Skills
Role of the NWC in the downturn:
NWC Reconvened
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
NWC Guidelines 2009/2010
(1 July 2009 – 30 June 2010)
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
Flexible Wage System
Jobs Credit & Workfare Income Supplement (WIS)
•
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
Tripartite Upturn Strategy 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
Upturning the Downturn
© 2009 Government of Singapore
20/17
Positive signs of Recovery
GDP growth positive
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 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%
© 2009 Government of Singapore
21/17
MOM Survey on Measures to Cope with the Downturn
MOM Survey on Measures to Cope with the Downturn
MOM Survey on Measures to Cope with the Downturn
29%
Performing
well, 46%
Gradually
recovering,
25%
Unemployment rate fell
Seasonally-adjusted unemployment rate, Dec 05 – Dec 09
Jun 09
Overall: 3.3%
Resident: 4.6%
Sep 09
Overall: 3.4%
Resident: 5.0%
Dec 09
Overall: 2.1%
Resident: 3.0%
Resident
Overall
Source: Labour Market Survey, MOM
Redundancies Fell from 2Q09
Total Redundancies, Q4 05 – Q4 09
Q2 09
Total Redundancies: 5,980
Q3 09
Total Redundancies: 2,470
Q4 09
Total Redundancies: 2,220
Source: Labour Market Survey, MOM
Employment growth amidst downturn
Employment change by sector, Q4 05 – Q4 09
Q2 09
Total: -7,700
Source: Labour Market Survey, MOM
Q3 09
Total: 14,000
Q4 09
Total: 37,500
Outcome of Tripartite Efforts
•
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
Conclusion
•
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.
Thank You
© 2008 Government of Singapore