Singapore’s NWC Guidelines 2020/2021: Key recommendations for HR to note

Singapore's Government has accepted the National Wages Council (NWC) Guidelines for 2020/2021, the Ministry of Manpower announced yesterday (30 March).

These guidelines, which were released early to mitigate the impact of the COVID-19 pandemic, will apply for the period of 1 April 2020 to 30 June 2021, thus superseding the 2019/2020 Guidelines effective 1 April.

In sustaining the business and saving jobs, employers are urged to consider four key points in the guidelines, in order of priority:

1. Reducing non-wage costs, managing excess manpower
2. Tapping on Government support, pressing on with business and workforce transformation
3. Trimming wage costs (Wage recommendations)
4. As a last resort, responsible retrenchment

#1 Reduce non-wage costs, manage excess manpower

Taking into account the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchments, which was updated earlier in March, the NWC affirms the need for employers to take a long-term view of their manpower needs, including the need to maintain a strong Singaporean core, notwithstanding the economic uncertainty brought on by COVID-19.

Thus, the NWC recommends that the following steps:

Focus on training and upskilling

This will be covered under section #2 below.

Adopt flexible work schedules

For instance, employers can reduce weekly working hours without having to adjust wages, by creating a "time bank" of unused working hours, which will then be used to offset the increase in working hours in subsequent periods.

This way, employers are able to optimise the use of their manpower.

Support affected local employees who wish to seek a second job to supplement income

In the event an employer implements job-sharing arrangements, temporary layoffs, or a shorter workweek, they should support employees who are keen on taking on an external part-time or temporary role.

The guidelines add: "To help companies save jobs, employees are also urged to support employers' cost-cutting measures and reasonable efforts to manage excess manpower. Unemployed workers should also take advantage of training support schemes to upgrade themselves and be flexible in accepting new job opportunities."

#2 Press on with business and workforce transformation

As part of the Resilience Budget announced last week, the Jobs Support Scheme has been enhanced and extended, wherein the Government will now co-fund 25%-75% of wages, depending on sectors.

In light of this, employers are encouraged to accelerate the implementation of business and workforce transformation initiatives, to then gain a competitive advantage and be better prepared to grow when the economy recovers.

Under this umbrella, the NWC recommends:

Bring forward planned training programmes

Employers are advised to bring forward any planned training they may have for employees, in order to put their employees' downtime during this period to productive use.

For those who have yet to develop training plans, they can get assistance from the National Centre of Excellence for Workplace Training, Singapore Business Federation, Singapore National Employers Federation, NTUC LearningHub, the unions and other relevant trade associations and chambers.

Employers may also tap on SkillsFuture for course fee subsidies and absentee payroll support; further support will be provided in the form of enhanced course fee subsidies, to sectors particularly impacted by COVID-19.

Bring forward the implementation of productivity initiatives

Employers should take steps to redesign jobs and train employees for these new jobs, with aid from the Stabilisation and Support Package revealed in February's Budget 2020.

Employers should also, where possible invest in training all employees in emerging skills, so they can remain employable and not at risk of redundancy. Eligible employers may tap on the new SkillsFuture Enterprise Credit to defray 90% of out-of-pocket expenses for business transformation, job redesign and skills training.

Establish Company Training Committees with the labour movement

According to the NWC, more than 450 Company Training Committees (CTCs) have been established so far, in aiding employers to build up their in-house workplace learning capabilities, conduct ops-tech road mapping, and re-strategise their business

Share productivity gains with employees

Employers who share their productivity gains with their employees will benefit from the enhanced Wage Credit scheme, which subsidises qualifying wage increases for locals.

#3 Trimming wage costs (Wage recommendations)

The following recommendations apply:

Management to lead by example, in the event of wage reduction

In the event an employer is adversely impacted by the outbreak and faces uncertain prospects, they may exercise wage reduction, with management leading by example.

Depending on their financial position and prospects, these employers may consider reducing variable payments, in accordance with the Tripartite Advisory. As wage reduction measures affect the livelihood of employees, especially over an extended period of time, employers should seek the consent of unions and engage employees before implementing such measures.

Employers should take into account employees whose wages are impacted

For employees who can't work overtime or receive overtime pay, those with commission-based variable payments, or those who have been asked to take no-pay leave, employers should take these factors into account if they are considering a reduction in other wage components.

Adjusting monthly variable wage components

If monthly wage levels are unsustainable, employers can consider adjusting monthly variable wage components. Under the flexible wage system, the monthly variable component (MVC), which is part of the basic wage, allows employers to adjust wages quickly in response to changes in the business environment without having to wait until the end of the year to adjust variable bonus payments and other annual variable components.

In the above scenario, employers can consider adjusting it downwards. The extent of the adjustment would depend on the employer's situation and any key performance indicators or guidelines for triggering a cut as agreed with the union (if the company is unionised) or employees.

For the rest of employers that have not implemented this MVC but need to adjust monthly wages downwards, they could consider treating any cut in basic wages of up to 10% as an MVC cut. In the case of management, depending on the circumstances and requirements of the company, the component set aside could be more than 10% of basic wages, in line with the principle of leadership by example.

Employers should set clear guidelines to restore MVC or basic wage cuts through future wage increases or adjustments when the business recovers.

Employers should endeavour to pay the Annual Wage Supplement, adjust wages of all workers fairly

As far as possible, the NWC affirms that employers should endeavour to pay their employees the Annual Wage Supplement, as recognising employees "fairly" will enable these employers to retain and inspire loyalty in their workforce and be well-positioned for the recovery.

Last, any reduction of wages that an employer takes should be applied to local and foreign employees fairly.

Apart from the above, companies that have done or are still doing well are encouraged to continue rewarding their employees accordingly. If business prospects are uncertain, they may exercise moderation in built-in wage increases.

With regard to low-wage workers - the NWC "strongly recommends that employers give special consideration to such workers, particularly those serving in the frontline of the COVID-19 response. Where wage reductions are necessary, employers should adopt a graduated approach, with deeper reductions at the management level and for higher-wage employees to effect the desired extent of reduction in total wage cost."

#4 Responsible retrenchment

As stated in the updated advisory on retrenchment, the NWC stresses that if companies have to resort to retrenchment despite undertaking the above measures, they should conduct this in a responsible manner. More on this can be found here.

In a statement, Minister for Manpower Josephine Teo emphasised that this new set of guidelines considers the needs and difficulties of both the business and workers in Singapore, providing guidance on how employers can sustain their businesses and save jobs, as well as outlining what workers should expect from their employers.

She added: "I urge employers to adopt these recommendations to help mitigate the impact of COVID-19 and position Singapore for eventual recovery. At the same time, we hope workers can do their part to support employers' efforts in saving jobs.

"These may be challenging times, but I am confident that if we work together in the true spirit of tripartism, we can get through this unprecedented crisis and emerge stronger and more united than ever."

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Lead image and infographics / NWC Guidelines taken from Singapore National Employers Federation's website