By Chua Mui Hoong

IN TEXTBOOK teachings on liberal market economies, employers want to maximise profits and cut costs to the bone; unions want to squeeze as much in wages as they can for workers; and the hapless government does its best to keep things stable by maintaining macroeconomic stability.

At least, that is what students are taught about liberal market economies like that of the Anglo-Saxon countries - which Singapore resembles.

Such economies are characterised by labour market flexibility (codeword for saying companies can cut wages, or hire and fire easily) and high business competitiveness (since companies can shrink their workforce nearly at will in response to business cycles).

In such a scenario, a recession is the time when companies slash costs by cutting the workforce.

But in Singapore - despite companies being competitive and enjoying flexible labour practices which allow them to hire and fire easily - some businesses are behaving differently.

Despite the increasingly gloomy outlook, a few organisations are coming out to say that they will not retrench staff this year, but will cut pay or increase leave to reduce the wage bill.

Back in November, CapitaLand announced pay cuts of 3 to 20 per cent to trim the wage bill to save jobs.

Chartered Semiconductor reportedly instituted pay cuts of 5 to 20 per cent. Temasek Holdings also cut pay, with top managers bearing the brunt of 90 per cent of the total wage savings involved in the cuts.

NTUC FairPrice has pledged a no-retrenchment policy this year for its 6,400 staff. Singapore Airlines and MediaCorp are introducing no-pay leave options to cut the wage bill.

A survey of 160 employers found that half intended to manage costs 'aggressively', suggesting they would consider measures to reduce cost rather than retrench staff.

This 'cut costs to save jobs' rather than cut jobs to save costs approach, as labour chief Lim Swee Say pithily put it, has the backing of the tripartite partners.

Guidelines agreed on among the labour movement NTUC, the Manpower Ministry and the Singapore National Employers' Federation in November, spelt out retrenchment only as a last resort, and inevitable only in the 'worst circumstances'.

As profits plummet when the downturn bites, many companies will still axe jobs in the months ahead. Indeed, some already have, including DBS Bank, Parkway Holdings, and Philips Singapore.

But the hope is that most will heed the tripartite guidelines to stave off job loss as far as possible.

On their part, government agencies have been swift to introduce paid training for workers to soak up companies' excess manpower, and offer loans to ease companies' credit crunch.

Ministries like Home Affairs, Education and Health are stepping up hiring. State infrastructure projects are being speeded up to boost the economy.

As for unions, they back measures to reduce costs, such as agreeing to wage cuts or enforced no-pay leave.

All in all, the response to the recession is an impressive attempt to convey solidarity, Singapore Inc-style, although no one expects zero-retrenchments from all.

Solidarity is a more appropriate response to bad times, than one where each segment fights for its share in classic dog-eat-dog capitalist manner.

But then, Singapore has always been a socialist-at-heart society with a capitalist economic veneer: a vibrant, competitive economy with generously state-funded public goods and income transfers.

A certain communitarian instinct favours most to accept wage cuts rather than for some to lose their jobs.

Quite apart from ideology, solidarity in a recession makes good social sense.

The experience of the last decade has taught Singapore the painful lesson that mass retrenchments exact pain not only on the individuals affected and their families - but also on society.

After all, the cost of supporting a jobless worker and his family falls back on society, via help for them in the form of wage supplements, paying off utilities and rental arrears, financial assistance for school-going children, and a host of other measures to support the unemployed.

What helps one company survive in bad times, via thousands of jobs axed, could cost society more in terms of the assistance measures meted out - not to add the psychological cost of anxiety and sour relations spawned by mass layoffs.

Apart from the insight that it is society that pays for the plight of the jobless, the other reason why companies are now more willing to keep jobs is that they have more weapons to fight down cycles.

The hard-won variable wage structure provides a buffer for companies to slash variable pay in difficult business conditions without having to wait to re-negotiate collective agreements.

Smart companies that think long-term also know that axing jobs in bad times erodes goodwill from both staff and customers - as DBS Bank found when it drew flak for being among the first to make headlines to retrench staff, in early November.

When labour, business and government pull together in the same direction, there is hope that jobs can be saved without undue damage to businesses' competitiveness, and without saddling society with high, permanent extra costs.

In its response to this recession, Singapore once again demonstrates its penchant for doing things its own way.

It does not follow the adversarial model of liberal market economies where businesses and workers fight for a dwindling share of profits. Nor does it follow the socialist model of instituting high-cost state welfare benefits that cripple businesses, to protect workers from job loss.

It charts a path based on solidarity, with a large dose of common-sense practicality: help companies trim the wage bill through creative means but save the jobs as far as possible.

Businesses that act in solidarity with workers in these times deserve support. As for me, I have decided to spend my Chinese New Year shopping dollars at NTUC FairPrice, to support the labour movement's supermarket cooperative in its no-retrenchment pledge.

This article was first published in The Straits Times on January 17, 2009.