Tan Kin Lian's Blog: Who should be retrenched first?

Friday, December 12, 2008

Who should be retrenched first?

Discussion in The Online Citizen
http://theonlinecitizen.com/2008/12/who-to-retrench-first-pm-vs-labour-chief/#comment-39428

Here are my views about who should be retrenched first - locals or foreign workers?

My answer is: retrenchment should be avoided. If demand drops by 20%, all workers should work 4 days (instead of 5 days) and take a 20% wage cut. The workers who are able to find alternative work elsewhere can resign. This allows the other workers to work more than 4 days and get additional income for the additional work.

How can the worker cope with a 20% cut in wages? They can draw down on past savings. I suggest a new scheme - to allow them to get a relief loan (for the drop in earnings) at a a modest rate (say 2.5% p.a.) for a period of 12 or 24 months. Such a scheme should be set up by the Governmetn as part of a social safety net. This is important in Singapore, in lieu of unemployment insurance.

We should treat our foriegn workers fairly. Many of them take big loans to come to work in Singpaore. We cannot send them back prematurely on an economic downturn.

In the future, we should plan the use of foreign workers carefully. It is better to have long term migrants into Singapore, if we need to increase our manpower and size of the economy.

Tan Kin Lian

Poll: How should a company cope with falling demand in a recession?
Number of replies: 95

Retrench local workers: 5%
Retrench foreign workers: 40%
Reduce the days worked and wages proportionately: 54%

22 comments:

Anonymous said...: Even the million dollar ministars themselves are confused. See the quote below:

NTUC Chief Lim Swee Say

LABOUR chief Lim Swee Say wants companies to put Singaporeans at the end of the queue when shrinking the number of their rank and file workers. Mr Lim believes the way to go in the current downturn is for firms to let non-Singaporeans go first, by not renewing the contracts and work permits of their foreign workers. ( Straits Times – 5 Dec 2008 )

Prime Minister Lee Hsien Loong

If we just send away the foreign workers now, it will do us harm. For example - companies which are already in difficulty and they hire half foreign workers and half Singaporeans and you tell them that foreign workers must go out. And when you take Singaporeans, his cost will go up and the company may close. And if the company closes, even the half who have jobs may lose their jobs. ( Lee Hsien Loong, 8 Nov 2008, CNA )

If they can be confused and contradict each other within a month, what say you?? Top pay for top talent in gahmen??; December 12, 2008 8:51 AM
ArtBoon said...: This comment has been removed by the author.; December 12, 2008 9:50 AM
ArtBoon said...: The boss will retrench the person that he thinks is contributing less.; December 12, 2008 9:51 AM
Anonymous said...: Exactly this is what I felt also when I hear different calls from the same government. On one hand they appear to be caring for locals and on the other hand ask locals to accept not allowing foreign workers to go. There is also another minister contradict say dun retrench the foreign workers, if that is so, why is LSS never interact properly within themselves b4 talking publicly, wat a shame !; December 12, 2008 9:56 AM
Anonymous said...: Isn't retrenching slackers and keeping high-performing employees more equitable?; December 12, 2008 10:06 AM
Anonymous said...: We are entering COMPLEX ALGEBRA MODE.. X-Y and Z space, but now come the W-space. Hard to integrate the fourth dimension; December 12, 2008 10:13 AM
Anonymous said...: Charity begins at home. These foreign workers are guest workers in this country and if the downturn is too severe, we should take care of our own and let them go first.

Yes, they took big loans to come here but most of what they paid went into the pockets of middlemen.They were greedy and thus fell into the scam of these Cons. Also, they came here with the hope of making more than what they would have got in their home country so it's not as if they have a great love for this country. If there is no work for them or if the exchange rates were not in our favour, they'll exit the country in droves. Let's not displace our sympathy for these foreign adventurers and bounty hunters.

Making Singaporeans work less and thus take home less pay so that the foreign workers need not suffer too much? Share weal and woe with them? In this instance, I agree with the Government and think that you are barking up the wrong tree. Your concern should be more for the local Singaporeans and not the foreigners.

On the subject of migrant workers, we should really only allow real talents and not the trash that other countries don't want as it appears currently. And we should not do it in a way that upsets our way of life. Just go to some clinics at the KK Hospital and you would think that you are in some hospital in India or China. Please do not cheapen the red passport!; December 12, 2008 11:26 AM
vertigoer said...: Mr Tan, I don't quite agree with you on 20% pay cut for all employees.

Because, after the cut, will they raise back the 20% salary when their business is better?

Businesses should consider themselves who they want to keep for the business to survive and thrive.; December 12, 2008 12:03 PM
Tan Kin Lian said...: Most people like to have meritocracy, i.e. the poor performers should be retrenched.

When they become the selected person, they will feel that there is great injustice. By that time, their colleagues will be happy to have avoided this sad fate.

A good company should keep trim at all times, and remove the poor performers (especially during the good times, when they can find alternative employment).

During bad times, the pain should be shared fairly.

I am not suggesting a salary cut for the same work. I am suggested reduced salary for reduced days at work. The additional time can be usefully spent on learning and preparing for the future - or part time work.; December 12, 2008 12:10 PM
Concerned said...: During this slump period, the rationale would be to keep all workers, with a deeper cut for those slack workers and maybe no cut for those good performers. For foreigners workers, we should stop all new workers from coming here. Foreign workers should be subjected to a deeper cuts in their remuneration than the local workers as foreigners contribute to a lot of social problems which is not factored in the economic calcuations.; December 12, 2008 12:30 PM
Anonymous said...: Keep all the workers by cutting down work days to 3 days a week or work 1 weeks less a months. Workers can have more times for their family members. It better than retrenched.; December 12, 2008 12:51 PM
C H Yak said...: Retrenchment should not be confused with sacking due to poor performance.

Sacking should be a on-going process whether or not the economy is performing well.

In retrenchment, I do not think it is a simple question of who should go first.

Those who need to go due to retrenchment should at least be compensated equitably. Then, it would not be an issue of who needs and should go first. I still believe there is inappropriate /inadequate mandatory legislations in this respect. Only recently, was the Employment Act revised to protect those who earn upto to $2,500.00, from the previous $1,600.00. And many employed on contracts for services are not protected at all, irregards the salary level.; December 12, 2008 1:31 PM
Anonymous said...: In my view, foreign workers should be first retrenched. Migrant or foreign workers came to Singapore to work knew as much of the risk; likewise, Singaporean workers working in foreign lands. We Sinaporeans are owners of this land, and we prosper or sink with it. Would the foreign workers stick their necks out for Singapore in time of war or any crisis.
KapokTan; December 12, 2008 3:45 PM
Anonymous said...: I err on the side of caution. We should take care of our own first. We can't keep bringing in foreign talent when our own Singaporeans are jobless. Train Singaporeans up to be as talented or even better than their foreign counterparts.

Mizzy; December 12, 2008 4:31 PM
Unknown said...: anonymous 11.26 says:
Yes, they took big loans to come here but most of what they paid went into the pockets of middlemen.They were greedy and thus fell into the scam of these Cons.
They were greedy? Is your brain working normally? Have some compassion just as you would eagerly welcome some compassion if you were in their shoes. Is it enough they are exploited.
h says:
Isn't retrenching slackers and keeping high-performing employees more equitable?
It is not always the high-performers who get promoted. Sometimes it those who can suck up better with their bosses. Retrenchment is a very crude tool. Not all the retrenched are slackers so stop labelling them as such!
So cutting down the number of working days would be a better option.; December 12, 2008 5:35 PM
Anonymous said...: Mr Tan, labour costs are only a small fraction of business costs (esp in S'pore which has mostly moved out of labour-intensive businesses), so reducing labour costs by 20% arent going to reduce a company's expenses by 20%.
A company can work 4 out of 5 days, but cant reduce its business costs by 20% either - there are other overheads like rental (mostly controlled by government through JTC/HDB/URA) etc which need to be reduced as well.
Govt can also introduce special incentives like accelerated capital allowances, lower fees for permits etc to lower business costs.
Why is the government's first reaction to ask employers to cut salaries/fire foreigners???; December 12, 2008 9:33 PM
Anonymous said...: They say Early Retirement is like Recession whereas RETRENCHMENT is like GREAT DEPRESSION! SACKING is like sending someone to the GALLOWS!
Now we are in RECESSION so it is alright to retire those older ones nearing retirement and engage with the younger one......they need jobs to pays debts as and when they are retrenched, they will be Greatly Depresed thus putting as a strain on IMH.; December 12, 2008 10:38 PM
Anonymous said...: don't you guys realized that the leaders have been saying all the "right thing" lately?

be it in matters of judiciary to who to retrench - local or foreigner - the words are all well crafted.

unfortunately, because of the lack of total transparency and the complexity of governance, nobody really knows whether these well crafted words have been translated to concrete actions or they just highlight a few scattered "politically correct" cases to silence their critics.

like one of the poster hinted above. it is a complex equation no simplistic solutions can resolve.

to achieve a more equitable and kinder society, we need to "loosen up" much more.

i don't see it happening yet.; December 12, 2008 11:05 PM
Unknown said...: i had personally witnessed it before

Technically speaking Foreigners are retrenched first.

Locals are always 'asked' to resign becos the HR hoohas involving their retrenchments usually kicks up a lot more dust than foreigners who usually keep quiet in hope of some not-too-negative-sounding referrals if in case of other employment opportunities, here or other where else

If the Locals dont 'accept' THEIR resignations, they are terminated on grounds of insubordination. Dont worry, the fact that they dont accept company arrangements means it IS insubordination.

The only time i know Locals are actually retrenched is when that company cease to exist altogether, meaning they cant even be bothered about ANY HR issues

So this discussion is rather pointless; December 12, 2008 11:15 PM
Anonymous said...: Own resignation is like RECESSION....meaning you are able and want to slow down!and take a new look at other options or maybe planing for early retirement hobbies or career switch etc.
Ask to resign means like Depression between the Devil and the Deep Blue Sea! It also carries a stigma for life that one is useless until to do so in resigning!
Some company practise is to promote you fast and when you cannot cope, you resign or maybe asked to resign........so how to say whar???; December 13, 2008 9:03 AM
Anonymous said...: Now where got need to retrench.
Just use any excuse & u are out.
"buyer beware".... beleive what they said at yr own risk.; December 13, 2008 12:34 PM
Anonymous said...: Keep hearing our labour chief Lim Swee Say persuading employers to take part in re-training/upgrading of employees during current bad times. But I don't understand the logic here! Maybe Mr Lim can enlighten me what type of jobs still have labour shortage and paying reasonably, I will enroll on my own.; December 14, 2008 3:26 PM

Friday, December 12, 2008

Who should be retrenched first?

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