Thursday, December 25, 2008

Avoid retrenchment

Straits Times did not publish this letter.
22 December 2008

Editor
Forum Page
Straits Times

There are discussions about the best way for companies to cope with decreased demand in a recession. The following options were considered:

> retrench foreign workers
> retrench local workers
> reduce pay across the board, to avoid retrenchments

I prefer the method used by the Governor of California State. He asked the state employees to take 2 days of no-pay leave, to reduce the state budget deficit.

Here is my reason. If there is reduced demand, there is reduced work. The company can ask all employees to take a few days of no-pay leave to reduce the wage cost and avoid retrenchment. In return, the employees extra days of leave (in proportion to the reduction in wages). They can spend the time with their family and friends or attend classes to upgrade their knowledge and skills.

To cope with the reduced wages, the employees can draw down on past savings or cut down on the discretionary expenses. For employee with fixed commitments that cannot be reduced, I suggest that they be provided with a low-interest rate loan for the reduction in their wages. This loan can be provided by the employer or the state at an interest rate of 2.5% p.a. (same as CPF interest rate).

I hope that this suggestion can be considered.

Tan Kin Lian

15 comments:

Anonymous said...

Looks like you are not in their good books or you have stepped on somebody's tail. Any strings you can pull?

By MX

Anonymous said...

The Straits Times is well known for publishing letters and articles based on its own agendas. This is another example why Singapore falls short of true democracy and a free press.

Everlearning said...

This is the very sustainable way to keep our economy going and keeping our citizens out of jobs.

Your blog is the best place for viable suggestions and your readers will benefit from your edifying postings.


Don't give up sending this letter to ST. Sooner or later they have to respond to it if you persist.

Vincent Sear said...

It's ironic, isn't it? The Governor of California, Arnold Schwarzenegger, shot to worldwide fame with his Terminator movies. Now as Governor, he's saving jobs from being terminated.

Anyway, I agree it's a good way to save jobs and livelihoods.

Merry Christmas to all.

Ghim Moh resident said...

I like articles from the Business Times which always show articles from New York Times, Bloomberg and Washington Post. I like to read articles from Paul Krugman, Paul Samuelson, Lynette Khoo, Larry Wee, R. Sivanithy, Mak Yuen Teen to name a few.

You can't say theres no free press which falls short of true democracy if you always read their articles. Business Times belongs to SPH where Strait Times belongs too. Theres always room for improvement like everything else.

Anonymous said...

Better for you to be the next elected president. Then they will print your ideas and speeches. Maybe they too afraid to offend the Boss.

MX wrote.

Anonymous said...

The government dislikes being taught what to do, especially by the likes of Tan Kian Lian's who is a perpetual reminder of their incompetency and non creative just-follow-the-boss mindsets.
Having said that, i think the letter might stand some chance of being published if perhaps, it is written by some unknown Tan Ah Kow ... but not tan kin lian definitely!

By the way i think the proposed action is pretty good, though it may need some fine tuning to adapt to the different industries.... Good or not good, it can serve as a start point to generate discussion to lead to a new solutions.

Unfortunately, the top people in media as well as the government departments in charge prefer to play safe and steer clear from anything not originating from the elite PAP thinkers.

What i dont understand is why people so fearful of losing their jobs or not promoted.

Many people (those 50 to 60 yrs old) in a position to make critical decision CAN actually retire comfortably. It only takes about 2 to 3 million to retire comfortably, with not too many luxury expenses. And i am 100% sure many many people in government service, in the media, are on superscale anyway, and after working 20 years or so their accumulated wealth(includes real estate) is sufficient to support the rest of their 25 or more years of life. 20 years ago it was cheap to get property, and for that reason there are NUMEROUS people in 50's and 60's who can actually retire comfortably. But they chose to stay on to serve un-creative holier-than-thou masters of the land and don't speak up or act in the interests of the community.
REX

Jonathan Wong said...

My question is whether 2 days of no pay leave are really substantial enough to make a dent in the budget.

Assuming around a 250 day work year (365 days - 104 weekend days - ~10 public holidays), 2 days off will only result in less than 1 percent decrease in annual wages paid - and that's not counting annual bonuses or anything else.

It's a win-win initiative to be sure, but I'm just not sure that 2 days will really be enough.

Tan Kin Lian said...

Dear Jonathan Wong,

It is 2 days of annual leave a month. It represents a cost reduction of 10% (assuming an average of 20 days of work).

I was not sure earlier whether it was 2 days a month or a year. After checking, I found that it was 2 days a month, which was quite impactful.

muddy waters said...

ST did not publish your letter because it repeats "retrench, retrench, reduce" like an insistent mantra. That could well set previously comatose minds to thinking,

"Hmm, why do we need 84 elected MPs, one NCMP and nine NMPs? 94 members and their accompanying baggage to serve a tiny populace of 4.5m? Surely excessive, let's retrench 25% and save ongoing millions in salaries and benefits."

"Hmm, a globe-trotting 85-year old geriatric with a penchant for first-class jaunts on a whim, trailing a cort├Ęge of medics and assorted hangers-on? Not free, you know. Why are we paying through the nose for no tangible benefit? In these difficult times, retrench him and the savings to the nation would be immense, forever."

"Hmm, the government has a controlling finger in every private enterprise pie from cradle to crematorium. Isn't that stifling creativity and entrepreneurship, the very qualities we desperately need to sweep away the clearly failing ideas of the past 30 years? Time to unwind the nanny state, reduce the bloated boardrooms of musty ex-warriors, render unto Caesar what is Caesar's and to the people what is rightfully theirs. We're at a momentous point in modern times after all, aren't we? There's hundreds upon hundreds of millions to be freed up and an exciting new direction to take. And we could begin with NTUC for a start."

See what mischief your letter could bring about, Mr. Tan? Heaven only knows how creative people could get at saving money when they calculate that the Singapore PM draws a wage greater than the salaries of the heads of state of the USA, Australia, Germany, France, Canada, UK, and Russia — combined. That is probably why your letter to the ST is in the round filing cabinet.

Anonymous said...

It's imperative we continue to find ways to save the taxpayers' monies and cut costs during this period of time.

Now that the majority of the private sector taxpayers (paymasters) are barely able to keep themselves afloat in the current financial tsunami, the least their beneficiaries, the public servants, especially the thousands of highly-paid education officers A2 and beyond, can do is to stick to the BASIC remuneration, to show solidarity with their paymasters, till better times.

For a start, promotion from A2 and beyond could be put on hold except for replacing the Peters as in Peter Principle where the past-prime officer has already risen to his/her level of incompetence and is stuck there for years only to mark time whilst the job is often delegated and accomplished by better qualified, more competent (though not necessarily visible on reports lest someone gets unseated perhaps) but cheaper subordinates.

The basic remuneration & benefits as follows (MINUS the performance and other bonuses like AVC) is already drolling given the current bad economic climate.

(1) 13-month annual pay
(2) annual wage increments
(3) 5-day work week
(4) holiday for at least 3/4 of the 12-week school vacation.
(5) generous UPA & Childcare Leave
(6) Connect Plan Payout
(7) annual promotion exercise
(8) periodic pay revisions
(9) other perks

Furthermore, unlike the private sector, public servants, rightly so, are never retrenched. And we don't really have to worry about under-performance in bad times, do we? Especially with what's happening in the private sector.

Anonymous said...

Taxpayer said . . .

There's no reason for the government to increase the civil servants' pay first each time it wants to increase the pay of political appointees. Reason being, public servants have the iron rice bowl (plenty in good times and quite the same, without retrenchment even when times are bad); unlike political appointees who have to seek fresh mandates from the electorates every five years. Are we spoiling the generally clock-watching public servants?

Sgcynic said...

A good idea. Maybe that's why it's not published for public awareness and discussion. It would make the political masters and machinery look bad. Take heart. Perhaps it would be implemented later down the road and someone up there would then take credit for it, as few are aware about the orginal source and proposer.

Anonymous said...

This is nothing new. Hewlett Packard in the 80's used a 4-day week when business was bad during the electronics cyclical turns. That means a 20 percent pay cut.

Anonymous said...

This is a slap on their face. You're going against the all holy ft policy, cutting their extravagant salaries and destroying their image of all's well, life is good. Oh I'm sure they'll love publishing this one.

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