In May, they (the council) said that if a company is losing money, they can consider wage cuts; if not, then they can reduce bonuses," Lee told reporters. "But we have to see if that is sufficient or we have to go further than that."

He expected the NWC, which is due to meet in two weeks' time, to recommend "some very severe restraints as the minimum". If the NWC does so, it would be only the second time it would have proposed wage cuts in its 29-year history.

Recession-hit Singapore's export-driven economy is headed for a three percent contraction this year after 9.9 percent growth in 2000, reflecting the hard times businesses in the city state are now facing.

Key electronics exports have slumped in the wake of a global slowdown.

Prime Minister Goh Chok Tong said last weekend that wage adjustment would be part of cost-cutting efforts to save jobs, but he stressed the government had no plans to devalue the Singapore dollar to woo investors with a lower wage bill.

According to a poll conducted by Remuneration Data Specialists (RDS) in late October, 28 percent of 174 Singapore companies surveyed planned to freeze wages in 2002 in anticipation of worsening economic conditions.

Eighteen percent had already frozen wages this year.