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Where am I? > Home > Publications > Articles > Human Resources > Managing in a downturn

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Managing in a downturn

David Rankin of BusinessHR offes some advice to those forced to make redundancies

The economic situation seemingly deteriorating it appears inevitable that  more and more companies will be forced to make job cuts. There is certainly no shortage of gloomy forecasts out there . For instance:

• Official statistics show that the number of people unemployed has risen to 1.82m - the highest level of unemployment for 11 years. This means that 5.8% of the workforce is unemployed. The CBI has warned that unemployment could peak at almost 3m by 2010;
• The CBI's latest Service Sector Survey reported that job losses in the service sector are expected to accelerate with firms reporting steep falls in business volumes and profitability, as well as plans to scale back employment and investment. Companies operating in consumer services saw profitability fall sharply for a third successive quarter;
• The Manpower Employment Outlook Survey found that large year-over-year declines in the construction, manufacturing and finance sectors are contributing to the weakest UK hiring forecast in 15 years;
• The CIPD's 'Labour Market Outlook' survey found that 26% of respondents have made contingency plans for additional redundancies;
• The EEF's economic forecast for 2009 warns that up to 90,000 jobs could be lost in the manufacturing industry;
• The KPMG Report on Jobs shows sharper drops in permanent and temporary placements than have ever been seen in the survey's eleven-year history. Permanent placements declined for an eighth consecutive month with the rate of contraction accelerating to a new survey record. Similarly, temporary staff billings fell at the sharpest rate in the series history;

London is likely to be hit hardest by the recession - the Local Government Association estimates 370,000 job losses in London by the end of 2010.

If you do find that you need to make cuts, do bear in mind that redundancies may not always be the answer. Sometimes a period of lay off or short-time working may see you through a temporary dip but allow you to retain your skilled and experienced workers.

Other types of agreement are also becoming more common, such as a percentage reduction in salaries across the board (sometimes for a temporary period); agreements to work either full or reduced hours for reduced or no salary for an agreed period with repayment when conditions improve; or the ability to take extended leave at a lower rate of pay for those who wish this. Also many employers are more inclined to consider flexible working requests for job-shares, part-time working, term time only if this will enable them to avoid redundancies and retain key workers.

If you are facing the need to make redundancies, do ensure that you get it right.  UKWA members can get lots of advice and guidance from the BusinessHR website (www.businesshr.net), together with template letters and forms, while helpline is well used to advising on selection criteria, procedures, consultation etc.

Join UKWA on +44 0207 836 5522