The technology sector is feeling the effects of the downturn. But employers say the sector will bounce
back – after a restructure. Karen
With more than 100,000 jobs lost in the UK alone, the technology sector has taken
a battering over the past two months.
Most recently Motorola announced it is to close its Bathgate plant in
Scotland with the loss of 3,100 jobs, which followed closely on the heels of
Ericsson’s decision to axe 10,000 jobs, with a proportion of these expected to
come from this country.
Other firms that are to cut jobs in the UK include Nortel Networks, Cable
& Wireless, Marconi, Cisco Systems and Racal Telecoms as the economic
downturn in the US begins to affect this side of the Atlantic.
The Federation of Electronic Industries is confident the sector will
recover, but only after a period of restructuring.
Anthony Parrish, the FEI’s director-general, believes the job losses reflect
a fundamentally strong industry that grew too quickly. He told Personnel Today
he thinks the redundancies will result in a smaller but more highly skilled
"Growth rates will return to the levels of between 5 and 8 per cent in
three or four years’ time, but this does not mean the total number of those
employed in the sector will increase," he said.
Geoff Boot, vice-president for HR at fibre-optics company Bookham
Technologies, which has had to cut 190 jobs, agrees. He said, "We need to
weather the current dip in the market, and our plan is to raise the skills levels
of our workforce.
"Many of our customers are US-based, so we have felt the impact of the
Boot is cautiously optimistic about the company’s prospects. "I hope we
don’t have to do anything similar during the course of the year. It’s a matter
of watching the sector closely," he said.
Bookham Technologies, which supplies companies such as Nortel Networks,
managed its job cuts through a voluntary redundancy programme.
The CIPD predicts the situation will get worse before it gets better. John
Philpott, the institute’s chief economist, argues that the economic slump in
the telecoms sector is far from over. He expects further job losses and
believes the economic outlook for the telecoms sector is gloomy.
Philpott said, "The market has expanded very quickly and reached full
capacity as far as consumers are concerned. There is more bad news to
But he is hopeful about the future for those workers affected. He said,
"This sector has a long-term future and I believe the workers are very employable
and will find jobs."
It is unlikely, however, that the redundancies will help solve the UK’s IT
skills shortage, according to Roy O’Brien, director of IT staffing company
Plexican. He claims that the current round of job cuts will not release new
talent on to the jobs market.
O’Brien said, "Most staff being shed are at a more junior level, such
as the relatively unskilled helpdesk staff or junior programmers. The biggest
skills shortage is at the higher end of the market."
He says a significant loosening of the skills bottleneck will occur only if
employers are forced to cut their more highly skilled staff. "We are
seeing some senior staff being released, but not nearly enough to put a dent in
current demand," he added.
Baron, adviser on employee resourcing at the CIPD, argues that HR professionals
in the sector should avoid redundancies if possible by implementing flexible
She said, "You can put policies in place such as varying staff’s
working hours and employ core peripheral workers to deal with peaks in the
production cycle. HR needs to minimise the need for redundancies."
Baron added that if redundancies are inevitable then HR can take action by
ensuring workers don’t find out the bad news in the press. She said, "If
the redundancies are communicated badly then this can have a demoralising
effect on the workforce.
"If the jobs situation deteriorates, HR will have to take an
increasingly active role in minimising the impact of these redundancies on
those affected and the remaining workforce."
One example of good HR practice, according to Baron, is for employers to
have career counsellors in place to let staff vent their feelings about the job
So as the number of workers in the sector continues to fall, companies will
have a vital part to play in increasing the skills levels of their workforce,
meaning HR will have to be at the forefront of the training agenda in the
How two multinationals tackled consultation over redundancies
Motorola and Ericsson have demonstrated different approaches towards
employee consultation on redundancies.
As a non-unionised company, Motorola has formed a consultation forum of 15
elected workers and management. The company is examining ways to reduce the
impact of redundancies on the local economy. One option being discussed is the
organisation of outplacement packages and details of severance pay.
Ericsson, by contrast, is in the middle of talks with engineering union the
AEEU over plans to cut jobs.
Dominic Johnson, the CBI’s head of employment relations, points out that HR
has a critical role to play in consultation.
"There is an important role for HR in the management of the
consultation process," he said. "But HR people don’t just worry about
those workers leaving but those remaining with the company too. It’s important
that the job concerns of the remaining workforce are addressed."
The role of the Government in intervening in a company’s decisions has also
been called into question by the recent job losses. Earlier this month, Tony
Blair personally intervened in Motorola’s case when he pleaded for jobs to be
safeguarded. Philpott applauds the move but thinks it is unlikely this
intervention will become common.
Jimmy Elsby, the T&G union’s assistant general secretary, argues that
government has a central role to play in the behaviour of multinationals over
job cuts. He is urging the Government to take a more interventionist role by
signing up to the Information and Consultation directive to give unions and
workers a say in redundancy decisions.