Supplementary Information on Unionised Companies
17 May 2006
1 At the National Wages Council press conference this morning, Mr Lim Swee Say, Deputy Secretary-General, National Trades Union Congress, revealed some statistics and information regarding unionised companies vis-à-vis their implementation of the Monthly Variable Component (MVC), Key Performance Indicators (KPI) and higher wage increases to low wage workers. Below are the statistics and information as at 16 May 2006:
A) Implementation of Monthly Variable Component
|
|
Unionised Sector |
|
Implementation by Companies * |
61% |
|
Implementation by Employees ** |
82% |
Note: * Percentage over total number of companies in unionised sectors.
** Percentage over total number of employees in unionised sectors.
2 Since 2000, 44 unionised companies have implemented wage/MVC cuts to tide over difficult times. The cut in wage/MVC ranged from 1% to as high as 11% for bargainable employees, depending on the situations and circumstances that each company faced. The 44 unionised companies are from the following sectors:
a) Air Transport
b) Real Estate
c) Building Construction
d) Storage and Warehousing
e) Manufacturing Instruments
f) Manufacturing Insulated Wire and Cable
g) Manufacturing Un-insulated Wire and Cable Product
h) Building and Repairing of Ships/Boats
i) Manufacturing/Repairing of Other Special Purpose Machine
3 Please see ANNEX A for two cases of companies that have implemented wage/MVC cuts and as a result, have survived difficult economic times. Because of confidentiality, the two companies’ names are revealed in the cases.
B) Implementation of Key Performance Indicators
|
|
Unionised Sector |
|
Implementation by Companies * |
42.2% |
|
Implementation by Employees ** |
38.9% |
Note: * Percentage over total number of companies in unionised sectors.
** Percentage over total number of employees in unionised sectors.
C) Implementation of Higher Wage Increases to Low Wage Workers
|
|
Unionised Sector |
|
Implementation by Companies * |
45.0% |
|
Implementation by Employees ** |
44.6% |
Note: * Percentage over total number of companies in unionised sectors.
** Percentage over total number of employees in unionised sectors.
The above information and statistics are for the media’s reporting.
For media queries, please contact:
Goy Kae Lip
Consultant
Corporate Communications Department
National Trades Union Congress
DID 6213 8184
HP 9792 0650
Email goykl@ntuc.org.sg
ANNEX A
Cases on Monthly Variable Component Cuts
1) Logistics Company
By 2003, before implementing the cut in MVC, a logistics company had built up 5% MVC in the employees’ monthly salaries.
Due to continuous losses since 2002 and from pressure by the shareholders to turn the business around or risk being sold to another entity, the company negotiated with the union for staggered MVC cuts in August 2003.
i) Performance for First Half of 2003
- Net Operating Loss of close to S$1 million
- Market rental rates fell by up to 40%
- Contribution margin dropped by up to 28%.
- Surface preparation business volume fell sharply
- Electronics industry downturn drive down volume
ii) Other Cost Cutting Measures on Non Wage Items
- Negotiated for 2% to 12% rate reduction from suppliers and sub-contractors
- Managed overheads by controlling the usage of electricity
- Change work pattern to optimise manpower resources
- Maximising the operating hours of equipment by using them for night operation and or to start early in the morning
iii) Implementation of Wage/MVC Cuts
In order to lead by example, the Management Staff and Executives implemented a deeper and earlier wage/MVC cuts.
|
Categories of Employees |
% of Wage/MVC Cut |
Effective Date |
|
Senior Management |
12.5% |
1st July 2003 |
|
HOD & Senior Managers |
10% |
1st July 2003 |
|
Other Managers |
7.5% |
1st July 2003 |
|
Executives |
5% |
1st July 2003 |
A lower percentage cut in MVC for Bargainable Employees (Include Junior Executives) was implemented one month after the cut on the Management Staff. Employees earning less than S$1000 per month were not affected by the MVC Cut.
|
Distribution of Salaries |
% of MVC Cut |
Effective Date |
|
Less than or equal to S$1,000 |
0% |
1st August 2003 |
|
Between S$1,001 to S$1,799 |
2% |
1st August 2003 |
|
Equal or greater than S$1,800 |
3.5% |
1st August 2003 |
- Review Period (6 monthly) on the performance of the company was agreed to ensure that once the company turns around, the employees will be fairly rewarded for their cooperation and sacrifices;
- In the event of retrenchment, the payment of retrenchment benefits shall be calculated based on the salaries as at 1st July 2003 or the last drawn salaries, whichever is higher;
- In the event an employee leave the company for whatsoever reasons, the encashment of any outstanding Annual Leave will be calculated based on the salaries as at 1st July 2003 or the last drawn salaries, whichever is higher;
- In the event if the company achieved the performance target; the MVC Cut will be restored and a special bonus will be payable to all employees.
iv) Restoration of MVC
In July 2004, the company’s business improved and 3% wage increase was given to all employees. The company had since rebuilt its MVC to 5.6%.
2) Electronics Company
Before the implementation of the wage/MVC cut, the electronics company had accumulated 5% MVC in the monthly salaries of all employees. In order to overcome the financial difficulties and to retain the operations in Singapore, the union agreed to cut the accumulated 5% MVC for all bargainable employees, with the management taking the lead with deeper cuts.
i) Situation in Home Country
- Corporate restructuring was implemented in home country: Headquarters in home country conducted restructuring exercise and all overseas plants were similarly asked to trim down costs. The mostly costly overseas plants were likely to be downsized or closed down.
- In addition, the weak financial position of banks in home country makes it even more difficult to rely on them for any financial support in implementing temporary restructuring effort.
ii) Situation in Singapore
- The Singapore company was tasked to close down its operations and all employees in the company to be retrenched.
- However, the Singapore company requested for a grace period of one year to turnaround the operations in Singapore, through a total cost reduction of S$4.8million within the financial year ending March 2004. If the target is not achieved by the deadline, the Singapore company will be wound up and relocated to Malaysia.
- To achieve the desired cost reductions, wage costs was one of the items to be affected.
iii) Implementation of Wage/MVC Cut
- For Bargainable Employees:
5% cut in MVC.
- For Non-Bargainable Employees:
Progressive wage cut, ranging from 5% to 22% for all non-bargainable employees.
- The Management to implement financial assistance to help employees who are severely affected by the cost reduction exercise;
- In the event of retrenchment, the company will pay retrenchment benefits, calculated based on the salaries before the wage cut;
- If company managed to turnaround, employees will be rewarded with additional non-cumulative payment at the end of the financial year; and
- A profit sharing formula to be implemented for more flexibility and responsive to company’s performance.
iv) Restoration of MVC Cut
The MVC cut had since been restored and the current accumulated MVC is at 6.5%.
