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The National Wages Council has recently concluded its second set of meetings for the year and published the guidance from the National Wages Council (NWC) Supplementary Guidelines 2020/2021 and the updated Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (TAMEM).

Since March 2020, the economic fallout from the COVID-19 pandemic has become more widespread. The Singapore economy has entered a recession, with more slack in the labor market and mounting pressure on employers to retrench. The NWC 2020/2021 Supplementary Guidelines provide employers with updated guidelines to sustain businesses and save jobs under these challenging circumstances.

The NWC calls on employers to work closely with employees with a view to helping each other move towards the recovery phase. This includes seeking employees’ support to implement temporary wage cuts to the extent needed to minimize retrenchments. Any wage cuts should be reasonable considering the sector’s and company’s performance and outlook, with regular reviews to restore cuts to wages in a timely manner in tandem with business recovery. Notwithstanding the necessity of wage cuts to save jobs, employers should continue giving special consideration to low-wage workers.

To emerge stronger from this crisis, employers and employees should take a longer-term view in retaining workers to preserve and upgrade capabilities, including retraining and redeploying workers, instead of retrenching. The NWC strongly recommends for employers that do not have a Flexible Wage System (FWS) to urgently implement it, as this would give them the flexibility to navigate economic uncertainty, increase job security for employees, and ensure that wages are fairly and more quickly restored in tandem with eventual business recovery.

The NWC reiterates that retrenchment should be a last resort. If employers have to retrench workers, the updated TAMEM provides guidance to employers on how to do so in a responsible and sensitive manner.

Read the guidance here.