Chartered axes 600

IN THE first big retrenchment that comes a week after the Government unveiled job-saving measures in its Budget, Chartered Semiconductor said it will lay off 600 workers worldwide, after :posting a fourth-quarter loss of US$114 million ($170 million).

The bulk of the job losses, 540, will be in Singapore where all its manufacturing operations are.

Before wielding the axe, did the company — one of the world’s largest microchip makers — take into account the new Jobs Credit scheme which would see the Government reimbursing employers a portion of each local workers’ wage?

In response Chartered said it has, since the last quarter, been cutting costs through measures such as salary cuts, overtime elimination and reducing contract positions.

“However, customers are cutting back more than expected as they deal with increased uncertainty and raisinginventories, and as a result, Chartered is expecting sequential revenues reduction of around 31 per cent corresponding to utilisation level of about 37 per cent,” said spokesperson Celestine Lim on Friday.

“We are guiding for a loss of US$147 million ($222 million) for the first quarter. Given this, Chartered felt that a corporate re-sizing was indeed necessary to adjust to our business activity level.”

The affected employees here, an even mix of foreign and local workers, make up close to 8 per cent of its 6,900-strong Singapore workforce.

On Friday, Japanese semiconductor giants NEC Corp and Hitachi also announced job cuts of 20,000 and 7,000 respectively, amid scaled-down sales forecasts for the year.

Madam Halimah Yacob, executive secretary of the United Workers of Electronic and Electrical Industries, defended Chartered’s decision, noting its “colossal” loss last quarter. “Their excess situation is really quite big ... they don’t have enough demand to sustain normal production activity, (not) enough jobs for the workers to do,” said Mdm Halimah, who is also NTUC deputy secretary-general.

The company has been in close consultation with the union since November, she said, to “explore ways of cutting costs and to save jobs” before resorting to retrenchment as the “last option” in early January. In November it announced a temporary pay cut of 5 to 20 per cent. It strove to keep local workers and released 273 foreign contract workers in December.

For axed workers, those with more than three years’ service will get one month’s pay for each year of service. The rest will receive half a month’s pay per year of service, subject to a minimum of a month’s salary. All affected employees will also enjoy an ex-gratia payment.

All keen and eligible staff will be put on the Government-subsidised Skills Programme for Upgrading and Resilience (Spur), in addition to Chartered’s outplacement services.

Asked if Singaporeans should brace for a slew of retrenchments despite the Jobs Credit scheme, Mdm Halimah said one has to be realistic, as it is not possible to save 100 per cent of jobs on the line. “There will be companies that face tremendous pressure and it’s not possible to stave off retrenchment,” she said.

“There will be companies where (Jobs Credit) will provide them with a new lease of life and help keep the workers. And then there will be situations where, without the scheme, retrenchments will be even worse.”

While no companies have yet approached the union in the post-Chinese New Year period to discuss retrenchment plans — possibly due to the prolonged plant shutdowns — on a bright note, Mdm Halimah said a few firms approached had been positive about the Jobs Credit scheme.

Having previously flagged their intention to lay off workers, they are now reviewing their plans, she said.

Still, economists agree that the Jobs Credit is not a panacea for retrenchment, with HSBC’s Robert Prior-Wandesforde noting the scheme can “really only hope to cushion the blow and will have more impact on small, labour-intensive sectors”.

In the same vein, Acting Manpower Minister Gan Kim Yong said that when retrenchment becomes unavoidable, “efforts will be targeted at helping affected workers” through training schemes like Spur.

According to research house Gartner, the global chip industry will decline by 16 per cent in 2009. The slump has led to global layoffs, including in this past week, Philips Electronics, Toshiba and Sony.

- TODAT newspaper