Should Working From Home Justify A Pay-Cut?

The Covid-19 pandemic has proven widespread working from home (WFH) does not reduce productivity and potentially reduces costs for both employer and employee, so it would be just too good for employers if they could also reduce their wages bill.

- Jennifer Lee

In Malaysia, cutting pay for remote working has already become reality since the beginning of the pandemic last year with most of the companies surveyed cited reduced income as a factor. Similarly, this trend is also evident in Singapore

PANDEMIC INDUCED PAY-CUTS According to a survey by the Federation of Malaysian Manufacturers (FMM), more than 50% out of 419 companies polled revealed that revenue had dropped by more than 50%. This has led to the inability of businesses to sustain their operations beyond three months, with the MCO in force.

FMM said given the inability of businesses to sustain their operations with the current workforce, some of the likely cost-cutting measures that employers would undertake in order to preserve employment include freezing headcount (67% of respondents), instituting unpaid leave (59%), removal of some non-contractual allowances and benefits (59%), forced annual leave (59%), reduction on work days per week (39%), reduction in some benefits agreed in the collective agreement for unionised companies (34%) and reduction in working hours per day (29%).

For managerial level staff, 36% of respondents are likely to cut 10% to 20% of the salary, while 28% are likely to cut pay in the range of between 5% and 20%. For executives, 54% of employers surveyed are likely to cut pay in the range of 5%-10%, while 51.7% of respondents are likely to cut for non-executive salaries in the range of 5% to 20%.

In Singapore, a similar sentiment is felt across the board where the general expectations are that there will be very limited, if any, salary growth this year in the Singaporean employment market. Even firms with strong results will not see significant salary increases as they will stay in line with the wider market, says an industry observer.