Tan Kin Lian - Perspectives Fear of retrenchment
A news report said that nearly 40% of Singaporean workers fear job loss in 2024, a significant increase from 25% last year.

I suggest the following approach to deal with this fear.

1. The employer should reduce the working hours with a proportionate reduction of pay. Instead of retrenching 10% of the workers, get all workers to take a 10% pay cut and work 10% less hours. 

2. Allow the worker to take a loan for the pay cut. The loan is provided by CPF and carries interest at the CPF rate, i.e. 2.5% pa. The employer pays the makeup pay (for the pay cut) and reports it to CPF to maintain the account.

3. If the worker has personal savings, he does not need to receive the makeup pay loan.

4. The worker can repay the loan at a future date. If it is unpaid, the loan will be deducted from the CPF savings that are withdrawn after the retirement age.

5. By allowing the worker to get a makeup pay loan, this scheme ensures that the worker can continue to maintain the current mandatory spending. The worker is likely to reduce the discretionary spending but it will be on a voluntary basis 

6. As the worker works less hours, he can spend more time with the family or friends or take up a hobby or take up an enrichment course.

I hope that the government adopts this suggestion 

Tan Kin Lian

Add Comment

---