SINGAPORE investment company Temasek Holdings has emerged as the first employer here to publicly announce a company-wide round of pay cuts.
'We anticipate a global recession in 2009 and possibly beyond. Therefore, Temasek will institute a firm-wide wage cut, led by senior management who volunteered 15 to 25 per cent,' said Temasek's managing director for human resources, Mr Robert Chong.
He said 90 per cent of the anticipated wage savings will be borne by Temasek's key managers.
Temasek currently manages a portfolio worth about $130 billion, which is invested both at home and abroad.
'As a long term investor, we believe this current crisis will throw up tremendous opportunities,' added Mr Chong in his email to The Straits Times on Friday night.
'Yet, we also recognise the short term challenges and will adjust our actions appropriately.'
Despite the extensive wage cut, Temasek still expects to expand its staff strength by 15 per cent over the next two years.
'This is part of our longer term plan to have a staff strength of about 500,' said Mr Chong.
According to its latest annual report, Temasek has 'a 350-strong international team' based in Singapore.
Headcount reduction has begun at telecommunications provider Singapore Telecommunications. Since September, SingTel has shed under 100 positions, sources close to the company said.
"SingTel's retrenchment was aimed partly at eliminating redundancies created by its recent acquisitions," they said, adding that affected departments include treasury and human resources.
Additional layoffs could be expected as the local telco continues to "remove cost centres and redundant workforce," sources said.
SingTel completed its US$9 billion buyout of Australia's second-largest telco Cable & Wireless Optus in late October--its largest deal to date. Its other recent acquisition include a 22.3 percent stake in Indonesian mobile operator PT Telkomsel.
When contacted, SingTel spokesperson Ivan Tan declined to confirm or deny the company's recent layoffs.
"We periodically review our resources in terms of skills and numbers in accordance with our business needs and developments in the market," Tan said.
"On certain occasions, we release staff when (their) positions became redundant and there were no opportunities for redeployment," he added.
At present, he said that SingTel employs over 13,000 people, mostly in Singapore. This figure excludes workers at Optus.
In early October, the Australian telco laid off 350 people as part of an accelerated cost-saving plan that would result in savings of AU$75 million to AU$100 million by March 2003.
In the same month, Optus also revised its earnings forecast for the year ending March 2002, reducing an earlier double-digit growth expectation to single-digit. The Australian telco posted an EBITDA (earnings before interest, tax, depreciation and amortisation) of AU$1.4 billion for the year ended March 2001.
Although Optus said that the recent job cuts were due to the economic slump, analysts believe that it could also be a result of SingTel tightening its control over the Australian carrier.
In fact, a total of 800 jobs at Optus will be placed on the chopping board, sources said. SingTel's Tan would not confirm or deny future cuts at Optus.
Given the weak economic outlook, Tan maintained that SingTel will continue to manage its costs in other ways to help the company "avoid retrenchment unless absolutely necessary."
"Some of the measures we have undertaken include implementing a headcount freeze for non-critical areas, monitoring expenses on overtime and casual labour and cutting back on travel expenses," he said.
And while top executives from industries such as the airlines have volunteered to take pay cuts in order to keep from shedding jobs, SingTel CEO Lee Hsien Yang maintains that he will leave the matter to the board of directors.
Sensible decision Not surprised by the recent job cuts, Gillem Tulloch, Nomura Singapore Ltd joint regional head of Telecommunications, noted: "SingTel wants to remain profitable in tough times."
"It makes sense to reduce workers to lower costs," Tulloch added. "However, the measure will only yield marginal value for shareholders."
He believes that the Optus buyout is SingTel's "greatest mistake", as the local telco overpaid by more than 50 percent. "Only selected, careful acquisitions at attractive valuations will bring value to shareholders," he said.
For the quarter ending September 2001, Tulloch said that SingTel could report a loss due to a one-off exceptional item associated with the acquisition of Optus.
For the first quarter ended June 2001, SingTel had a net profit (after exceptional items) of S$601 million, down 4.8 percent from the same period last year. Its first quarter profit was S$579 million before exceptional items, down 2.5 percent from the same period last year.
Since the announcement of the Optus takeover bid on March 26, SingTel's shares on the Singapore Exchange have fallen almost 37 percent based on today's closing price of S$1.73.
SINGAPORE : In what is the first large-scale retrenchment here since the economy turned sour, IM Flash Technologies (IMFT) - a joint venture between chip giants Micron and Intel - has scrapped plans to build a wafer fabrication plant, laying off 800 employees in the process.
It became known on Thursday that the staff, 500 of whom are undergoing training in Utah, United States, were informed of the decision on October 13 in a meeting at the company’s Lehi facility. The remaining 300 - hired as production operators and who are mostly from India - have already left the company.
At press time, IMFT’s management, which is based in the US, could not be reached for comment. According to one affected Singaporean employee, the majority of the staff are non-Singaporeans. The employee told TODAY: “Prior to the meeting, everyone was already quite down. Because of the market conditions, some of us had suspicions (that there would be a massive layoff).”
Announced in 2005, the S$4.8-billion plant, which was intended to produce cutting-edge memory chips, was due to open in Woodlands later this year. It would have been one of the largest-ever investments in Singapore’s electronics industry.
But in May, its chief executive officer Rodney Morgan said the opening had been delayed until the middle of next year. While Mr Morgan reiterated the company’s commitment to the project, the writing was on the wall when Micron announced on October 10 that it was laying off 15 per cent - or 3,000 - of its staff worldwide.
It said that as a result, IMFT would discontinue the supply of NAND flash memory from Micron’s Boise facility in the US.
A Ministry of Manpower (MOM) spokesperson said it was “closely monitoring the employment situation and will work closely” with its tripartite partners and other relevant government agencies to “render employment assistance to workers who may be retrenched”.
She added: “Companies that are considering retrenchment, or that have decided to do so, are strongly encouraged to give prior notification to MOM. Early notification will enable MOM and the relevant agencies to help companies on any potential labour relations issues as well as provide affected workers with employment assistance.”