FORMER labour chief Lim Boon Heng has ruled out a cut in Central Provident Fund (CPF) rates for now, as it is a blunt instrument for trimming wage costs during a downturn.
Mr Lim was commenting on speculation that the National Wages Council, which will convene next month - four months ahead of schedule - to review wage guidelines, is looking at a CPF cut.
"We have learnt from past recessions that the use of the CPF cut is a blunt instrument," said Mr Lim in his speech at the dinner and dance of the Singapore Industrial & Services Employees? Union last Friday.
He added that a CPF cut is "not justified at this point in time".
Companies that need to trim wage costs to survive the downturn can do so with other measures that have been developed over the years, said Mr Lim, who is Minister in the Prime Minister's Office.
They can adopt a flexible wage system, for example. "Bonuses can be cut. The monthly variable component can also be cut if needed," he said.
Other measures, he added, include a shorter work week, with corresponding reductions in wages.
Mr Lim noted that the range of options available to employers and the fact that unions are willing to support such measures give Singapore an edge in weathering the downturn.
Referring to the trouble faced by the United States car industry, Mr Lim said the proposed bailout had failed because unions were unwilling to concede on wage cuts.
But unions in Singapore are willing to accept cuts, he said, because they understand that when companies do well, the employers will pay the workers their due.
As Singapore slips into a recession, the top worry among workers is unemployment, said Mr Lim.
The latest figures show that the resident unemployment rate was 3.3 per cent in the third quarter - up from 3.1 per cent in the previous quarter. The key to employment, said Mr Lim, is to make sure that one has the skills that employers need.
Bosses will keep their skilled workers, and even if the company has no choice but to retrench, workers who have the right skills will find it easier to get a new job, he said.
To help companies keep their core employees, the Government has provided $600 million in training funds.
"So we should be able to keep retrenchments to the minimum, and keep as many workers as possible employed," Mr Lim said.
He also stressed that bosses should not neglect the experience and expertise of older workers who have gone through business cycles before, and thus know how to deal with a downturn.
