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To survive, SIA 'must bear pain now'
Wage reform is the only way for airline to stay afloat as competition will get more intense in future, says Lim Boon Heng
THE competition for Singapore Airlines will only get more intense in the coming months and years and the company must respond by managing its costs.
And one key way to do so is to change its wage structure, said labour chief Lim Boon Heng.
'The drive for cost control and cost competitiveness is a brutal one in this industry. You either succeed in doing so or you are out,' he said.
Mr Lim painted this grim picture of the airline industry to leaders and members of the Air-Transport Executive Staff Union (Aesu), an SIA union, at its 38th anniversary dinner.
And he had a message for them: Start accepting that wage reform, no matter how painful, must be undertaken if the airline is to survive the competition.
As with many companies in Singapore, SIA needs to maintain a more flexible and competitive wage structure. The wages should reflect the value of the job.
'Increases should reflect the performance of the worker and the company, and not simply based on the seniority in the company.'
And productivity should be part of the formula for wages.
'This is the way to make the company competitive so that workers can keep their jobs and earn a living,' said the Minister Without Portfolio and secretary-general of the National Trades Union Congress.
Mr Lim's comments come in the wake of this week's announcement by SIA of pay cuts of between 22.5 per cent and 27.5 per cent for its management.
The airline, reeling from the fallout from Sars, is on the brink of recording its first-ever quarter of losses.
The Straits Times understands that SIA is asking rank-and-file employees to take a 15-per-cent pay cut and pilots to take a 22.5-per-cent hit. Cabin crew members have already agreed to take seven days' unpaid leave every two months until March next year to save costs.
More cost-cutting measures will be necessary if demand does not pick up, warned Mr Lim.
In his speech, he gave an overview of the competition in the airline industry, singling out how Lufthansa had boosted itself with one of the most flexible labour agreements in the industry.
Last month, the German carrier announced that it will cut the work schedule for all ground personnel by 1.5 hours per week.
Working hours for cabin crew and pilots will also be reduced as part of the measures to save $20 million this year.
An agreement signed by Lufthansa allows it to cut work schedules for ground staff immediately if there is a slump in sales.
If Lufthansa can do this, carriers following suit will make competition for SIA more intense in future.
'We need to respond,' Mr Lim said. 'We are supposed to have a superior industrial relations climate than Germany,' he noted. 'On the face of it, we seem to be behind Lufthansa already!'
But he also noted that it was not easy for union leaders to deal with the situation.
Their first task must be to help workers keep their jobs. And in the case of those in SIA who have to undergo compulsory no-pay leave, he said the management has agreed with the unions to allow them to work elsewhere temporarily while on such leave.
Ahead of the dinner, the leaders of Aesu and two other unions in the airline - SIA Staff Union and SIA Engineering Company Engineers and Executives Union - urged management to give members an assurance that the impending wage cuts will not be permanent.
The unions' stand is that any wage cut caused by Sars should be restored once business is back to normal.
The following statement of this minister need to be understood well. I never knew that bullshi**ing the employees are called as better industrial relations
Mr Lim said. 'We are supposed to have a superior industrial relations climate than Germany,'