The government-appointed council on Saturday made the call for wage cuts or freezes as hopes for a global economic recovery fade after the Sept. 11 terrorist attacks in the US, Singapore's largest export market.

"The government strongly supports the NWC's call for severe wage restraint, including wage cuts," the country's Ministry of Manpower said in a statement.

But mandatory employer contributions to Singapore's state-run pension system should only be cut as a "last resort," said Lim Pin, chairman of the National Wages Council.

The council, which includes representatives from unions, businesses and the government, normally meets once a year to suggest guidelines on wages. The panel made its previous regular recommendations in May but issued revised guidelines on Saturday amid a deepening recession.

"The main thrust of the [new] guidelines is severe wage restraint," Mr Lim said at a news conference. "This is in order to save jobs."

The statement issued Sunday by the Ministry of Manpower said the government "strongly supports and reiterates the NWC's call for management to lead by example in wage freezes [or] cuts."

The government also agreed with the council that companies "that are profitable and performing well should reward workers with appropriate wage increases," preferably in the form of a "monthly variable component" or special payments.

Although the council's guidelines are not directly enforced by law, they "provide a legal basis" for employers, employees and unions when they negotiate, said council member Ong Yen Her, adding that arbitration courts would use the council's guidelines as a benchmark for coming up with judgments in disputes.

Singapore, accustomed to years of booming economic growth, fell this year into its worst recession since it secured independence from neighboring Malaysia in 1965.

At the beginning of 2001, the government predicted growth of 5 percent to 7 percent for the year but twice revised that figure downward. The economy is expected to contract by about 3 percent this year, after growing by 9.9 percent in 2000.

The country's key exports of chips and other products for the electronics industry have plummeted due to sharp falls in demand in the US and elsewhere.

Unemployment rose sharply to 3.8 percent in September, from 2.6 percent in June.

About 17,700 people were laid off in the first nine months of the year in this country of four million people. A total of 25,000 are expected to lose their jobs by the end of the year.

The government this year has unveiled two economic rescue packages, worth billions of dollars, which include personal and corporate income tax rebates, rental cuts and aid for laid-off workers.

Earlier this month, the government announced plans for a high-level economic-review committee to evaluate government policies and recommend ways to "upgrade, transform and revitalize" its economy.

The 20-member committee, led by Deputy Prime Minister and Finance Minister Lee Hsien Loong, will present its first set of recommendations by April and aims to issue a final report by August 2002. The April date will allow recommendations to be put into the budget for the year ending March 2003, scheduled to be presented on May 3.