By TEH SHI NING

(SINGAPORE) Even though - or perhaps because - the present recession will hit harder and last longer than the previous downturn in 2003, the emerging consensus among employers here seems to be that layoffs must be the last resort.

In the last recession, when Singapore was Sars-struck in 2003, companies here - including big employers such as PSA, Singapore Airlines, Singapore Press Holdings and SingTel - carried out pre-emptive layoffs.

This time around, even before the National Wages Council (NWC) released revised guidelines in January, many employers had already moved to reduce their wage bills, and staved off (or maybe delayed) the need to wield the jobs guillotine.

The council will meet again next month to review and possibly put out a fresh set of wage guidelines.

Of the top six cost-cutting measures local firms have taken so far, five relate to wage costs - headcount freeze, hiring freeze, lower training spend, reduced salary increases, and lower bonuses - according to a recent Watson Wyatt survey of 70 employers of white-collar workers here.

Retrenchment ranked lowest of all the options. Though there were no comparative figures for 2003, Watson Wyatt Singapore strategic rewards director David Yong said that, hypothetically, layoffs could have come sooner that year because businesses were still recuperating from the 2001 slump when Sars hit.

Options such as wage cuts and hiring freezes could have been exhausted by then, and that could explain why layoffs seemed more prevalent then - unlike, for now, in the present downturn.

The global banking sector was where the current crisis erupted, but of the three local banks, so far only DBS has retrenched, axing 6 per cent of its workforce last November and drawing criticism from labour chief Lim Swee Say for the way it was carried out.

UOB has announced a wage freeze but no job cuts, while OCBC froze wages, lowered bonuses, and cut senior management salaries.

Wage cuts in varied forms have been the main response of corporate Singapore. Some wage cuts came with shorter work weeks. MediaCorp now runs on a four-day week every other week, reducing its wage bill by about 20 per cent.

Rival media group Singapore Press Holdings too cut wages in April to mitigate falling advertising revenues; the tiered pay cuts come with one day of 'special' annual leave for every 2 per cent pay reduction.

Property consultant Colliers Singapore took an unusual approach of 'deferring' staff salaries by between 5 and 20 per cent, with the promise that this would be paid back to employees at a later date if stipulated targets were met.

Smaller companies too, such as restaurant chain operator Apex-Pal International, have cut senior management salaries. Apex-Pal's CEO took a 25 per cent cut.

Others have had to scale up efforts to control wage costs. Venture Corporation, for instance, moved from a senior management wage freeze last September to pay cuts of 10-20 per cent in February.

Singapore Airlines asked staff to volunteer to take unpaid leave in March. By April, SIA had to take further steps - compulsory leave and a shorter working month, which the pilots' union is still up in arms against.

For some, reducing wages could not keep job cuts at bay. Chartered Semiconductors, whose order books were severely thinned in the global demand drought, ran initial wage cuts of 5-20 per cent but could not avoid laying off 600 workers in February.

In the semiconductor manufacturing sector, it was reported that five companies retrenched a total of 1,000 workers after Chinese New Year, which was when the 'first wave of retrenchment' broke out, the labour movement noted.

But Prime Minister Lee Hsien Loong said recently that unemployment numbers so far have been lower than expected. Layoffs in the unionised sector have stabilised at 200-300 a week.

The Chemical Industries Employees' Union, which has 90 member companies in the chemicals sector, said about five have had to retrench so far while another three have implemented staggered wage cuts.

Many who have had to shorten work weeks as production fell have signed employees up for Spur training schemes, to tap absentee payroll subsidies while upgrading staff.

Labour chief Mr Lim recently cautioned that a second wave of retrenchment will come. But in the meantime, companies and workers alike seem to be doing their best to make use of the flexible wage system and the government's 'save jobs' measures.

Which industry a company is in makes a difference too. The Singapore Manual and Mercantile Workers Union of companies in private sector services and commerce says that the nature of business in the healthcare and retail sectors, for instance, makes it difficult to use measures such as shorter work weeks.

Parkway Healthcare laid off more than 100 staff last December, as did a couple of others, while most have implemented 'austerity measures like freezing headcount or suspending fringe benefits'.

In industries where labour is still in demand, such as private security services, the union said it has not heard of any company taking measures to slash its wage bill, and reported positive reception of the Jobs Credit Scheme since their employees are mostly Singaporean.

Watson Wyatt's Mr Yong said that one factor which may influence how quickly companies move to retrench could be how difficult it is for them to hire people in the first place.

'Finding skilled people for jobs has been a difficulty in recent years, before this downturn. Those which need skilled workers and found it hardest to hire them in the first place would think twice about sacking them,' he said.

In a company where most job skills are fairly general and ' interchangeable' and require minimal training, rehiring would be relatively painless, so downsizing or right-sizing could be a more immediate option.

But either way, because it affects the 'overall employment deal' which the employee signed up to in the first place, companies should exercise wage cuts and job cuts only after careful consideration, Mr Yong said.

This article was first published in The Business Times .