Josephine Teo on wage cuts: “A key principle is for management to take the lead”

Singapore — Speaking in Parliament on Tuesday (Nov 3) on the issue of wage cuts during the current Covid-19 pandemic, Minister of Manpower Josephine Teo said wage adjustments are expected to vary across the various sectors as not every employer will need to cut wages to save jobs.

She was responding to a question from Ms Foo Mee Har, an MP for West Coast GRC, about the impact of wage cuts given the National Wages Council (NWC) guideline last month  calling on employers to consider cutting wages in order to minimise retrenchments.

According to a report by the Mothership website, Mrs Teo said: “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.”

Ms Foo responded by asking for a set of transparent indicators to guide wage adjustment rather than leave it so broad and at the discretion of the business.

Mrs Teo said the NWC also had to consider the opposite of having overly-narrow and prescriptive guidelines.

She said that the NWC opted to have a set of six principles instead:

1. Use the flexible wage system.
2. If there are employers not using the flexible wage system, any adjustments made to wages should constitute a new variable component in the pay structure.
3. Management should take earlier and deeper wage cuts.
4. Employers that already pay annual wage supplements should continue to do so.
5. When deciding to implement wage cuts, employers should take into account sector performance and government assistance.
6. Wage adjustments should be negotiated and agreed upon between the employer and employee. /TISG