LAST month, labour chief Lim Swee Say (right) criticised DBS Bank for failing to consult its staff union on retrenching its workers or exploring other cost-cutting measures first.

In a statement, he said: 'We are disappointed by the sudden decision.

'There was no prior consultation with the DBS staff union. There was no exploration with the union on other cost reduction alternatives.'

There were also several letters to the Straits Times Forum page from people who criticised the move.

In reply, a DBS spokesman wrote a letter defending the retrenchment exercise.

These are the reasons DBS gave:

A hiring freeze was already in place.

DBS had considered tiered pay cuts across the organisation, but the anticipated decrease in bonuses this year is already a form of pay cut, and further pay cuts would hurt junior employees most.

DBS today is more international than before.

Nearly half of its staff is based outside Singapore, so it was not fair for Singapore-based staff to bear the brunt of the pay cuts.

The changes in the financial landscape are not cyclical, but drastic and permanent.

It is essential that people come to terms with this harsh reality, and financial institutions across the globe are restructuring their labour force.

The retrenchment exercise was not merely for cost reduction.

Streamlining and optimising staff resources are part of an overall programme to position DBS for the future and take advantage of opportunities arising from the crisis.

The tough and unpopular decision to retrench is prudent and necessary for the bank in the long run.

This article was first published in The New Paper on December 11, 2008.