Companies Resort To Retrenchments To Stay Viable

Covid-19 pandemic has battered aviation industry across the world. In Singapore, despite the various support measures by the government, Singapore Airlines (SIA) continues to suffer significant financial losses due to the drastic drop in demand as a result of travel controls internationally. On 10 September 2020, SIA announced that the Group would cut 4,300 positions across its three airlines, namely, Singapore Airlines, SilkAir and Scoot. This will affect around 2,400 staff as 1,900 staff have been released under early retirement scheme or voluntary release scheme, among other mitigation measures implemented by the Group. With guidance from your economics tutor Singapore in economics tuition Singapore, discuss the impact of Covid-19 pandemic on Singapore’s aviation industry.

SIA is more vulnerable as compared with other airliners in the world as it does not have a domestic market to rely on. The Group is currently operating at 50 per cent flight capacity of its pre-pandemic levels. It expects passenger traffic to remain thin and a recovery only in 2024. You may consult your economics tutor Singapore in your economics tuition Singapore class about other cost cutting measures implemented by the Group.

SPH And Suntec Singapore

Apart from SIA, other companies have also resorted to retrenchments to “remain viable” in the face of an uncertain future. Earlier in August, Singapore Press Holdings (SPH) announced its third round of retrenchments in a short span of three years. The latest round of retrenchment will affect 140 staff, or five per cent of its total workforce. Affected staff will receive fair compensations as negotiated and agreed with the union. Total retrenchment cost is reported as S$8 million. Before this latest round of retrenchment, SPH had imposed pay cuts ranging from 5 per cent to 10 per cent for its senior management. In discussion with your economics tutor Singapore in economics tuition Singapore, compare the impact of the three rounds of retrenchments by SPH in the past three years.

Also in August, Suntec Singapore Convention and Exhibition Centre (Suntec Singapore) retrenched nearly half of its staff due to prolonged suspension of events since early April. 85 staff, including 60 local and 25 foreign staff members will be affected. They will receive retrenchment package equivalent to one month’s salary for every year of service, plus pro-rated annual wage supplement for the year. In addition, staff are allowed to encash their balance annual leave and use their notice period to attend job interviews. In consultation with your economics tutor Singapore in your economics tuition Singapore class, explain why senior staff of long service are less likely to be retrenched.

Retrenchment Benefits

Retrenchments in Singapore doubled from April to June this year, as compared with last year. In total, 6,700 workers were laid off during this period with even more expected to lose their jobs in the coming months. To understand the definition of retrenchment, you may sign up for economics tuition Singapore with a reputable economics tutor Singapore. Edmund Quek is the best economics tutor Singapore. His economics tuition Singapore centre is conveniently located within five minutes’ walk from the Bishan MRT Station.

Retrenched staff are entitled to retrenchment benefits, usually ranging from two weeks’ to one month’s salary for every year of service. Only staff who have served the company for a minimum of two years are entitled to retrenchment benefits. For those who have worked for the company for less than two years, it is subject to the company’s discretion whether to give them a goodwill payment. Employers are warned not to disguise retrenchments as dismissals, which may result in a withdrawal of all government support paid and payable to the employers. Although it is Ministry of Manpower’s advisory to pay retrenchment benefits to eligible retrenched staff, it is not mandatory for employers to comply if they have not entered into any collective agreement with the union or stated clearly the retrenchment benefits in their employment contracts.

Linda Geng

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