Are cutbacks the norm?

The CBI has trumpeted changes in the industrial relations landscape as workers fearing for their jobs sign up for new work practices to cut employers’ costs. Graeme Osborn reports

Pay freezes: employees are more willing to accept cutbacks in salary

Pay freezes: employees are more willing to accept cutbacks in salary

Pay freezes, flexible and short working hours are swiftly becoming the norm, according to a new survey by the CBI and recruiter Harvey Nash, as staff cooperate with employers in an unprecedented way to ride out the recession.

But while the CBI says that in return, companies are taking a more measured approach to restructuring and redundancies, it acknowledges that “most of the overall trends are downwards” and that unemployment will still peak at more than 3m by next spring.

Albert Ellis, chief executive of Harvey Nash, said: “It’s unprecedented for the workforce and management to come together on a range of measures.

“When clients have asked their people what they would prefer, the employees definitely go for putting on hold the long term by going for short-term flexibility. Would people prefer restructuring or taking a lesser amount of pain?

“The UK is uniquely positioned to recover on the back of green shoots we have seen in the US.”

For City accountant KPMG, there is no doubt in the value of flexible working. In what is fast becoming a case study for other firms, more than 85% of KPMG staff at have signed up for four-day working under the Flexible Futures scheme.

Said a spokesman: “That doesn’t mean that everyone is on short time. But managers are able to decide where to put people on reduced hours.” Currently 750 of the company’s 11,000 staff are.

Flexible Futures has not completely eliminated the need for job losses, and an unspecified number of people in one of its departments has entered redundancy consultation.

KPMG plans to reassess the scheme at the end of the financial year in September.

Last month 7,000 of British Airways’ 40,000-strong staff volunteered to take unpaid leave, part-time working or work unpaid to help the struggling company in its cost-cutting drive. The airline says the move will save £10m.

At the other end of the scale is the Genesis Housing Group, which builds, owns and manages social housing across London, the South-East and the Midlands. It also runs a charitable foundation that works in deprived communities.

As the recession has bitten, the group has revamped its pay rise system, it says, to reward achievers and keep staff motivated, rather than giving a blanket increase.

Allison Sofekun, corporate services director, said: “We wanted to ensure we could provide a performance appraisal system that allows us to focus staff on our new business needs, contain costs and reward good performance.”

Staff at the bottom of a pay scale who display outstanding performance will get a bigger pay rise than those at the top of a scale who do similarly well, for example.

Meanwhile, another survey warns of the downside of redundancies and indiscriminate cost cutting.

According to a poll by the Institute of Chartered Accountants in England and Wales and IT services company SunGard, more than 50% of respondents said redundancies and cost cutting had affected day-to-day effectiveness.

Rob Thomson, SunGard director, said: “Not all redundancies are as well planned as they could be, and a knowledge loss occurs. For suppliers, that could lead to the perception that they are not as good or as wellresourced as they once were.”

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