Tuesday October 21, 2008

Chartered Semiconductor salary cut - all employees pay reduced by 5-10% on economic slowdown

Employees of Chartered Semiconductor Manufacturing are the latest casualties of the electronics slowdown that has been hitting the Singapore economy for nearly 2 years running. Reliable sources have informed me that the company has just announced an across-the-board salary cut by between 5% to 10% as follows :

Director level : 10%
Manager level : 7.5%
All other employees : 5%

Apparently senior management is trying to avoid outright layoffs by implementing this pay cut, and it is at least encouraging to note that the management is taking the lead by absorbing a larger reduction on their own wages.

The slowdown is not going away any time soon, with the credit crisis not over yet, and with more to come as more mortgage loans reset in 2009, interest rates go up, and housing prices continue to fall. There will be no respite for the American consumer, whose support in purchasing all manner of electronics goods has been so vital to semiconductor makers like Chartered, which churns out chips for the likes of AMD and Microsoft's Xbox360, and various chipsets for mobile phones and other equipment.

Chartered employes around 5000-6000 employees, and you can be sure that these will be 5000-6000 employees who will definitely be pulling back and will not be spending further in the local economy, or that of our neighbour Malaysia where many of these employees come from. One can well imagine the wider impact as the ripple effects reverberate through the system.

I have been advising all around me to move on to more defensive sectors of the economy, and those who have listened and taken action are doing comparatively well. Now, as the governments of the world start pumping up the money supply in order to try to cope with the financial crisis, the next step you must take is to prepare for the next wave of inflation, which is due to return with a vengeance.

See also :

1. Chartered profit misses estimates
2. Junk bonds : Chartered Semiconductor debt rating lowered to junk By Fitch
3. Singapore industrial production unexpectedly dropped in Apr 2008 on drugs, electronics
4. Singapore economy falling into technical recession as exports fall
5. Singapore economy in recession, GDP contracts 6.3% in Q3 2008, MAS ends currency gain policy

(2008-10-21 08:40:53 SGT) [Biz] Permalink

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