Downsizing and laying off staff seemed to be the common strategy but this was not necessarily the best approach, Manpower Minister Lee Boon Yang said as Singapore faced up to 40,000 retrenchments by the end of next year.

Companies could try a shorter working week to manage excess labour, he said in the first government nod towards reduced hours after earlier official statements had suggested wage cuts.

"By keeping their factories and offices closed for part of the week or month, employers can reduce operating costs," Lee said.

"Some companies in the manufacturing sector have already implemented this tactic as an interim solution."

An independent survey released last week by Singapore-based researcher Remuneration Data Specialists found four percent of companies had introduced a shorter working week, compared to 14 percent which were retrenching staff, 15 percent downsizing and 37 percent imposing wage freezes.

The Singapore government has acknowledged rising unemployment could not be avoided in the recession, but argued that retrenchments should not be seen as a natural by-product of the downturn.

"Retrenchment is not the only option to cost cutting," Lee said, adding that if reduced manpower became inevitable then employers should look at wage freezes or cuts.

"I believe it is much better for all employees to have a job at lower pay than for 10 percent or 20 percent of their colleagues to be thrown out of their jobs," Lee said.

"Eighty percent pay is certainly better than no pay."

For once flourishing Singapore, which boasted a near 10 percent economic growth last year, the best government estimates are for a three percent contraction this year.

The trade-dependent island, one of Asia's most affluent societies, has fallen victim in particular to the severe slump in demand for electronics, the cornerstone of its export policy.

The National Wages Council (NWC) has been reconvened to review its annual wage guidelines, to determine if a fresh blueprint is required.

When the last guidelines came out in May, it was already clear the Singapore economy was in trouble, and the NWC refused to recommend an across-the-board pay increase.

Instead it advised employers to raise wages only if they could afford to.

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