SENIOR management of companies that need to cut employees' pay should lead by example - by reducing their salaries earlier, or accepting similar or deeper cuts.

This is because 'the principle and spirit of leadership by example should prevail' when the need to trim costs arises, according to guidelines issued yesterday, recommending cost-cutting steps companies can implement during the downturn.

Companies should also maintain close consultations with unions and be transparent.

The guidelines, issued by the Manpower Ministry, Singapore National Employers Federation and the National Trades Union Congress (NTUC), are an updated version of the Tripartite Guidelines on Managing Excess Manpower, launched in 2001.

One measure in the revised guidelines is the Monthly Variable Component, which forms part of the basic pay. It allows firms to adjust wages quickly, without having to wait until the end of the year.

As with the 2001 recommendations, these guidelines urge companies to consider retrenchment only as a last resort.

Businesses that have excess manpower as a result of insufficient work are advised to adopt alternatives, such as redeployment, a shorter work week, flexible work schedule or flexible- wage system.

They should also send excess workers for skills training. Said NTUC deputy secretary- general Heng Chee How:

'This economic crisis will test not only the survival instincts of companies and workers, but also their core values.'

Welcoming the move, Mr Ian Fong, managing director of accredited advertising agency Sirius Art, told my paper that in a crisis, all in a company should take wage cuts, but senior staff should volunteer a higher cut.

'If I could contribute 5 to 10 per cent ofmy pay to save an employee's job, I would,' he said.