The survey of 174 companies, including multi-nationals, revealed more than half expect conditions to worsen in the next six months.

Although Singapore employers and unions favour wage cuts to save jobs, an expected 40,000 retrenchments are expected this year and next.

The survey by Singapore-based researcher Remuneration Data Specialists (RDS), conducted in late October, found 18 percent of companies froze wages this year, and four percent either cut pay or planned to do so, the Business Times reported.

Another 28 percent of employers planned to freeze wages next year and reduce pay increments from this year's average 3.6 percent to 2.1 percent.

The survey was released on the day port operator PSA Corp. announced wage cuts of five percent for lower income earners up to 11 percent for senior management.

It followed other major companies including Singapore Airlines, DBS Bank and stockbroker GK Goh in slashing wages on a sliding scale. At GK Goh the cuts go as high as 30 percent for senior executives.

"Most companies are cautious and are waiting for year-end results before making drastic cuts," said RDS managing consultant Peter Lee.

He added many were banking on the economy to turn around in the second quarter of 2002 and currently preferred to downsize operations and reduce staff by attrition, instead of retrenching.

"They're paying heed to the government's call to cut wages than cut staff... unless the business is not viable anymore, companies are still holding on to their staff," he said.

More than two-thirds of the companies polled will still pay bonuses this year, averaging 1.1 month's salary, although this is expected to be trimmed to 0.8 of a month next year.

Prime Minister Goh Chok Tong last week warned Singaporeans to brace for lower wages, job losses and a fall in living standards as the economy is projected to contract by 3.0 percent this year compared to last year's 9.9 percent growth.

The trade-dependent island, one of Asia's most affluent societies, has fallen victim to the severe slump in global demand for electronics, particularly from the United States, its biggest export market.

The National Trades Union Congress has been demanding companies build a "variable component" into salaries, which can be cut to save jobs in a downturn, and reinstated when the economic climate improves.

Goh backed the idea in his May Day speech, when it was evident Singapore was trapped in the global slowdown, saying "more jobs can be saved if wage costs can be adjusted more quickly by the market when there is a sudden business downturn."

The government drew flak during the last economic slowdown with a blanket reduction of employer contributions to the compulsory state pension fund to cut costs when not all companies were hurting.

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