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SINGAPORE – Employers have been given the green light by the National Wages Council (NWC) to implement temporary wage cuts if it means saving jobs.
They should seek employees’ support before doing so and only make the reductions necessary to minimise retrenchments, the tripartite group said on Friday (Oct 16) in updated guidelines that will apply from Nov 1 to June 30 next year.
The council said it did not set a quantum for the wage cuts due to the uneven impact of the Covid-19 crisis across sectors and companies but any reductions should depend on the sector and company’s performance and outlook.
Employees should be told how wages will eventually be restored.
The guidelines, which are not compulsory but have been accepted by the Government, come after the council was convened in August for a second time this year.
They set out six key principles for implementing wage cuts, including employers using the annual and monthly variable components to adjust wages and that they cut basic pay only if really necessary to avoid retrenchments. Management should take earlier and deeper cuts to their wages.
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