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Oral Answer by Mrs Josephine Teo, Minister for Manpower, to PQ on the Impact of the NWC Supplementary Guidelines

Employment practices

NOTICE PAPER NO. 131 OF 2020 FOR THE SITTING ON 3 NOVEMBER

QUESTION NO. 299 FOR ORAL ANSWER

 

MP: Ms Foo Mee Har

 

To ask the Minister for Manpower what will be the impact of wage cuts in the next 12 months given the recent announcement by the National Wages Council that employers can consider temporarily cutting workers' basic pay if necessary to stave off retrenchments.

 

 

Answer

 

  1. The National Wages Council (NWC) issued its Supplementary Guidelines on 16 October 2020, encouraging employers and employees to work closely together to minimise retrenchments. The NWC expects wage adjustments in the next 12 months to vary across sectors and firms. Not every employer will need to cut wages to save jobs. Some have seen no reduction in demand and thus have no reason to make wage cuts. Others have already adjusted wage levels or non-wage costs, in line with the Guidelines issued in March.

     

  2. The NWC also expects that employers will deliberate carefully whether to proceed with a wage cut. A key principle is for management to take the lead in taking wage cuts, and to accept steeper cuts than what they ask of their workers. Employers will also be mindful that unwarranted wage cuts will make them less attractive to their workers, and they will risk losing talent. 
       

  3. The NWC has also clearly marked out a roadmap for eventual wage restoration. Employers are to quickly restore wage cuts accepted in good faith by employees when business conditions allow them to do so. In addition, the Supplementary Guidelines recommend that for workers earning below $1,400, employers should, if necessary to avoid retrenchment, freeze wages rather than cut wages.