Recession brings new employment landscape as employers cut costs

More flexible working hours, extended shut-downs, extra holiday and cuts in paid overtime have all become more commonplace as the recession has deepened as employers look to cut costs.

A new survey of key workplace trends by the Confederation of British Industry (CBI) and recruitment firm Harvey Nash showed almost two thirds of employers have made or are considering making significant changes to the way they organise their workforce and working patterns.

The UK-wide survey, whose 704 respondents employ a total of †three million staff, showed that the recession and rising unemployment have taken a severe toll, with over half of employers (55%) indicating that they were going to freeze pay during the next pay round, while 39% expect to make a modest increase.

Many employers are standing by their staff training, and two thirds want to target training more efficiently. In cases where jobs could not be saved, individual redundancy payments have averaged around £12,000.

Almost half (45%) have increased flexible working among staff to reduce hours and meet employee requests for a work-life balance. A further 24% are considering or intending to make increases. Making a flexible response to falling economic demand, a third (33%) of employers have cut their use of agency staff, while 43% have reduced paid overtime.

To keep employees incentivised, 62% of companies have kept their existing bonus structure but, in the wake of the credit crunch, 46% of firms in the banking, finance and insurance sector have reformed their schemes.

Nine out of ten (90%) of firms said they would make no changes to their redundancy package because of the recession. The average redundancy payment was just over £12,100, though this varied greatly among sectors, from £21,300 in banking, finance and insurance, to £5,700 in construction. Organisational size was also a factor: redundancy pay was £23,700 in firms with more than 5,000 staff, and £5,200 in the smallest organisations.

John Cridland, CBI deputy director-general, said: “Employers and their staff are doing whatever they can to keep businesses and jobs going, but the government can help by improving the availability of credit for investment. Firms are also concerned by the prospect of extra employment regulation at this difficult time. The government should wait for the upturn before increasing the load on businesses.”