Productivity must improve ‘to stave off wage stagnation’
SINGAPORE — Instead of giving shorter work weeks to workers in a bid to stave off rising costs, some firms are opting for other ways to cut costs, such as retrenchment or shutting down operations, which is a sign that productivity reforms are needed.
The National Trades Union Congress (NTUC) yesterday pointed to the third consecutive drop in workers put on shorter work weeks as a reflection of the grim outlook among employers. Firms which are not doing well may opt for shorter work weeks to save manpower costs. The fact that some are not even turning to this option points to the tough times they are facing.
Citing the productivity growth figures last year, which hovered at negative 0.5 per cent for the first three quarters, NTUC assistant secretary-general Cham Hui Fong said raising this figure will be its key area of focus this year.
“The last thing we want to see is when we reach wage stagnation ... at no fault of the employees or companies. Somehow, the productivity movement, the idea of making changes happen, is not going down to the ground,” she said.
In his New Year message, Prime Minister Lee Hsien Loong had also said productivity has to improve, lest incomes stagnate.
At a press conference yesterday, NTUC said 1,323 unionised workers were placed on shorter work weeks last year, down from 5,793 in 2013 — and a huge drop from the peak of 11,912 workers in 2011. This is a concern because it signals that firms think there is no room to salvage their business, said Ms Cham.
“If (the adoption rate of a) shorterwork week has come down and restructuring, retrenchment or closing down of businesses has come down as well, I don’t think that’s a big concern. But when companies do not conduct shorter work weeks, the worrying trend is that they are doing their sums and their projection is that ‘in the next three to five years, I’m not likely to recover, so there is no need for us to move to shorter work weeks’. And if their next directive from HQ is to close down, I think this is something that we would want to avoid.
“So, a shorter work week is actually a healthy sign ... there are still ways for them to reposition themselves to see how they could continue to invest in Singapore … but when that trend slows down and we see restructuring taking place too quickly ... there’s something we need to pay attention to.”
Last year, five unionised firms offered a shorter work week, down from 10 in 2013 — which the NTUC attributed to a lack of orders and a slowdown in business. It also saw 2,212 unionised workers laid off — 27 per cent fewer than in 2013. Two-thirds of the lost jobs were from the manufacturing sector, primarily in electronics. High costs, poor business and restructuring, which saw eight firms relocating to countries such as Thailand, contributed to the job losses, NTUC said.
It estimated that about 300 workers in the chemical and electronics sectors will be retrenched in the first quarter. NTUC’s preliminary estimates showed that unionised workers received a wage increase of about 4.1 per cent last year, down from 4.63 per cent in 2013. They were also likely to receive a bonus of three months on average — lower than 2013’s 3.16 months. VALERIE KOH
