Dollars and Sense

If the words "credit crunch" and "global recession" sound unfamiliar to you, which planet do you live on? *just kidding*.

By now, the world is reeling from the contagion effects of the financial crisis that originated from United States. We are witnessing steep job cuts by companies across America, Europe and Asia. Being an open economy that depended heavily on global trade, Singapore has not been spared either. A number of TLCs ("Temasek-linked Companies", which are essentially Singapore government-owned corporations that have been gradually privatised since the 1980s) have recently announced significant retrenchment figures. This has surprised the general public because they have been faring much better than the American counterparts, and their current situation do not warrant unavoidable layoffs of such scale. It's no secret that our local Minister of Labour, who spoke on behalf of the country's de facto labour union National Trade Union Congress, had given his sharp criticisms to these companies.

Indeed, retrenchment should be seen as the last resort in adapting to the difficult business environment. Some actions that may be adopted to save jobs include:-

• Reducing direct costs of sale e.g. alternative raw materials sources, bulk buying, electronic procurement system.
  

• Reducing costly capital investments e.g. non-critical renovations, new facilities, R&D.
  

• Reducing cost of labour e.g. salary of senior management, unncessary overtime hours, business travels ban.
  

• Reducing discretionary expenses, eg gifts and entertainment including annual dinner and dance and new year parties, lavish perks like 5* hotel, laundry or first-class air tickets.
  

• Reducing provisions in the balance sheet e.g encouraging employees to clear their unutilised leave, reduce year-end bonuses, stringent risk management, effective debt recovery process.

• Improving productivity e.g. training, process redesign, equipment maintenance.
  

It would greatly interest me how much the directors and chief executive of these companies will be getting this year after sacking hundreds or thousands of their employees. Yep, you bet I will be scrutinising their annual reports.