Trimming staff even when doing well?

YOUR company may be expanding, but your job might still not be safe.

In one instance, three staff from Parkroyal Hotels and Resorts found this out when they lost their jobs last November due to role redundancy.

This followed the integration of the corporate offices of Parkroyal and Pan Pacific Hotels and Resorts.

The restructuring, however, boosted staff strength of the hotels’ listed parent company, Hotel Plaza Limited, to 87 — up from 85 previously, said a spokesperson.

She added that the integration had been planned since the middle of last year, and “has been communicated openly with all associates in the past few months including potential changes in the management structure”.

Up to 10 positions were made redundant. But the three staff who lost their jobs claimed they were caught off-guard.

“We expected maybe changes in portfolio, but not to be axed,” said one of them. “At our monthly staff cocktail sessions, we were told we could look forward to a better future with restructuring, and (we were) asked what we would like to do.”

There are various reasons why companies retrench even as they expand. Healthcare group Parkway Holdings, for example, announced on Dec 22 that it was going to manage a new hospital in Abu Dhabi.

This was just one week after it announced retrenchments of up to 148 staff and cuts in senior management’s salaries by 15 to 35 per cent.

Its group president and chief executive officer Dr Lim Cheok Peng said the retrenchments were to “contain costs”, even as the company sought to grow its business.

The recently-announced Jobs Credit scheme — whereby the Government helps foot 12 per cent of the first $2,500 of local employees’ salaries — will only help save jobs that are temporarily redundant, said labour economist Hui Weng Tat.

“If the redundancy is permanent, or beyond a year or even several months, keeping the workers would involve footing 88 per cent of the cost,” said Associate Professor Hui of the Lee Kuan Yew School of Public Policy.

Companies could also retrench and re-hire to reduce their wage bill, said labour economist Rosalind Chew of Nanyang Technological University.

New staff recruited to replace the retrenched workers are likely to be fresh graduates or younger workers, or they could be hired on a temporary basis, she said.

“This has been a common practice among companies. That is one of the reasons for the move towards the flexible wage system, as under this system, the gap between the starting wage and the highest wage is much smaller than in the case of the seniority wage system,” said Assoc Prof Chew.

A flexible wage system links a company’s performance with rewards for employees, and includes components such as variable bonuses, annual wage supplements and annual increments.

According to the Ministry of Manpower’s labour statistics, 23 workers in the hotel industry were retrenched in the first nine months of 2008.

For the fourth quarter, 8,500 workers were made redundant — accounting for over half of the year’s total retrenchments — but breakdown by industry is unavailable as yet.

Mr Koh Juan Kiat, executive director of the Singapore National Employers Federation said the redeployment of staff and shorter work weeks was common in the hotel sector during the 2003 Severe Acute Respiratory Syndrome outbreak, when tourism was badly hit.

- TODAY newspaper