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Government Accepts the National Wages Council 2020/2021 Supplementary Guidelines

1.  The Government accepts the National Wages Council (NWC) 2020/2021 Supplementary Guidelines, which builds on the NWC 2020/2021 Guidelines issued earlier in March 2020.

2.  Since March 2020, the economic fallout from the COVID-19 pandemic has become more widespread. The Singapore economy contracted by 13.2% on a year-on-year basis in the second quarter of 2020, while total employment contracted by 129,100 in 1H 2020. The overall unemployment rate rose to 3.0% in July 2020 and retrenchments rose sharply to 8,130 in 2Q 2020. Taking into account the external and domestic situation, MTI expects the Singapore economy to contract by 5.0% to 7.0% for 2020 as a whole.

3.  COVID-19 has already begun reshaping the world. The Government supports the NWC’s call for employers to evaluate their existing business situation and the outlook for their sector, and take a longer-term view to emerge stronger from the crisis. As far as possible, employers should take maximum advantage of Government support measures and implement appropriate cost-saving measures to retain existing employees, retrain and redeploy employees in restructured business units to new jobs within the company, and continue to equip them with skills for the future, especially the Singaporean core.

4.  The Government agrees with the tripartite partners on the need for greater wage flexibility in order to save jobs. The Government also supports the tripartite agreement to not call for a reduction in employers’ CPF contribution as this would be a blunt move which would not take into account the varying circumstances of individual companies and employees, and would disproportionately affect local employees.

5.  Given the significant variation in circumstances across sectors and firms, employers should refer to the set of key principles in the Supplementary Guidelines for clear guidance to work out the wage cuts appropriate to their own circumstances, and seek their employees’ support to do so. Temporary wage cuts may be necessary to minimise retrenchments, preserve critical capabilities and support business restructuring, but employees who are retained should be given fair and reasonable wages as they would have basic expenses to upkeep. Wage cuts accepted in good faith by employees should also be restored when business conditions allow. Notwithstanding the necessity of wage cuts to save jobs, tripartite partners agreed that employers should give special consideration to low wage workers.

6.  The Government encourages every employer to implement the FWS if they have not done so to give businesses the necessary 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.

7.  Retrenchment should be a last resort for employers who continue to have a viable business plan post-COVID-19. Where retrenchment is necessary, employers should adhere to the updated Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, which calls on employers to carry out retrenchment exercises in a respectful manner, and with compassion.

8.  The Government remains committed to supporting our workers who are affected by this unprecedented crisis. Working together with businesses and the unions, the National Jobs Council has provided over 117,500 jobs and skills opportunities, and placed over 33,000 locals into these opportunities to date. To create more job opportunities, the Government has set aside $1 billion under the Jobs Growth Incentive (JGI) scheme to encourage businesses to bring forward their hiring plans and grow their local workforce.

9.  The swift consensus reached by the NWC is testament to the strong tripartite foundation based on trust. Together, we can help Singapore emerge stronger from this crisis and be better-positioned to respond to the impact of COVID-19 on the future of work.