East Asia is gearing up to retain as many jobs as possible in this global economic climate. It was almost inevitable that Japan and Singapore would join the global economies in recession due to their export-driven economies.
In Japan’s case, demand for Japanese cars had fallen overseas, forcing the Japanese carmaker giant Toyota to slash its forecast earnings n 2008 to less than 1/3 of the previous year. Japan’s carmakers based in the US even had to offer interest-free loans to up its sagging car sales.
Analysts in Nomura for example has urged the government to boost government spending on research and development (e.g. in fossil fuel alternatives), medical healthcare and education on top of the classic infrastructure building to boost domestic consumption. Others have suggested cutting corporate tax and rectifying problems in Japan’s national pension system.
In Singapore, retrenchment has become a subject of social discussion. But Singapore has developed a tradition and world-class system of coping with retrenchment exercises, consistently voted as the best industrial relations system in the world by the World Economic Forum. The government has acted to stem anxiety during a time of financial crisis.
Some options suggested by academics include the removal of the monthly variable component of the employees, removing part or complete end of the year variable bonus, cutting employers’ CPF contribution as a last resort. All these are carried out with inputs and support of workers and unions as well as companies along with the government as part of a tripartite arrangement.
Kwan, Weng Kin, “Japan needs to tackle a different beast” dated 20 November 2008 in the Straits Times (Singapore: Straits Times), p. A21.
Lim, Chong Yah, “Only as a last resort” dated 20 November 2008 in the Straits Times (Singapore: Straits Times), p. A22.