Retrenchment is the reduction of costs or spending in economic times of difficulty. Due to the COVID-19 pandemic, many businesses that are classified as non-essential services were forced to close during the circuit breaker (21st April to 1st June 2020). This has a significant impact on the businesses.
I believe the retrenchment exercise by Resort World Sentosa has been shocking to many. The exercise started in May 2020. From what I have read from the news, Resort World Sentosa has offered half a month salary for every year of service for those that took up the voluntary retrenchment scheme in May.
Below is extracted from Ministry of Manpower’s Responsible Retrenchment:
The prevailing norm is to pay a retrenchment benefit of between 2 weeks to 1 month salary per year of service, depending on the company’s financial position and the industry.
In unionised companies where the amount of retrenchment benefit is stated in the collective agreement, the norm is 1 month’s salary for each year of service.
I am not going to debate here whether Resort World Sentosa retrenchment is fair or unfair. I have been through a retrenchment exercise before and thus will like to share how I have prepared for a next possible retrenchment after the last one.
Tip 1: Keep your resume updated
The very first thing is to keep your resume updated even though you are currently still employed. Believe me or not, the company will never tell you their plans when they want to retrench you.
One fine day, we were told to gather in a meeting room, informed that we are retrenched, escorted by security guards to our desk to pack our things and off we go out of the company’s door. There is no time to react.
Thus, we should always keep our resume updated so that we can immediately send out our resume to hiring companies as soon as possible to shorten the duration of landing ourselves into a new job.
Tip 2: Keep your skills updated
Very often when we get comfortable in our current job, we have forgotten to upgrade ourselves. Most people thought if they have worked for many years in the same company, they are less likely to be retrenched. This is not true. In the modern society, there is no longer such a thing called “loyalty”. Companies are looking at making profits and hiring people with better skills to help the company grow bigger and faster.
To survive within the same company, we should continue to keep up with the trend, invest in courses such as using our Skills Future credits to uplift our skills and make ourselves valuable.
Tip 3: Save up for retrenchment
It usually takes 3 to 6 months to get yourself landed in a new job. With monthly utility bills to pay, you will be under tremendous pressure when you see your savings declining and no income coming in.
After my last retrenchment, I have built up 6 months of funds set aside in preparation for the next unexpected retrenchment. I did this by purchasing Singapore Savings Bonds every month. I am not saying you should do the same. You can stash aside the money in a low risk high interest yielding savings account.
Do not invest your retrenchment funds into stocks as the stock market is very unpredictable. You might be unable to sell the stocks for cash when the stock market happens to be down when you are jobless.
As a guideline, save at least 6 months of your current salary to prepare for the next retrenchment.