SALARIES of Singapore's top civil service officers and ministers will be cut as a 'sharp' recession threatens to increase job losses and hurt lending this year, Bloomberg news reported on Monday.
The top government salaries, which are linked to economic performance, will fall 12 per cent to 20 per cent in 2009 and 'may be subject to further adjustments given the volatility of the economy', Defence Minister Teo Chee Hean, who is also in charge of the civil service, said in Parliament on Monday.
Singapore is scheduled to unveil more measures on Thursday to help companies cope with the deepening global slump, which caused exports to contract in 2008 by the most in seven years. The National Wages Council last week advised employers to freeze or cut pay rather than fire workers.
Job losses may reach the levels recorded in 1998 during the Asian financial crisis and 3,300 workers may be fired in the coming months, Minister of State for Manpower Gan Kim Yong said in Parliament on Monday.
About 4,800 people were retrenched in the fourth quarter based on early notifications, he said.
The seasonally adjusted unemployment rate was 2.2 per cent as of September. Employers cut 6,418 jobs in the first nine months of 2008, the Ministry of Manpower said last month.
Little can be done to mitigate the current downturn, which has spread to all parts of the economy, Trade Minister Lim Hng Kiang said in Parliament earlier on Monday.
The nation is facing unprecedented conditions in this 'sharp' recession, he said.
Consumer Sentiment Consumer sentiment will weaken as the nation's manufacturing and financial industries slump further, Mr Lim said. Construction and healthcare companies will generate jobs as those industries are still growing, the minister said.
Investment in manufacturing and services will fall this year as demand weakens and companies face difficulty in securing funds, the Economic Development Board said earlier today.
The government will focus on easing lending to companies as loans may decline in the coming months with banks turning more cautious, Mr Lim said.
Still, Singapore's banks are not facing a liquidity crunch and the financial system remains 'fundamentally sound', he said.