Firms warned not to use credit crunch as excuse for job cuts

A stern warning has been issued to employers tempted to make mass redundancies during the credit crunch despite facing no financial pressure to do so.

Senior business figures have warned that companies may look to axe hundreds of staff this year with less scrutiny from unions because of issues caused by the economic slowdown.

A quarterly survey released last week by consultancy KPMG found 53% of private and public executives were planning to reduce their staff headcount, up from 29% in March. But 84% of the 203 organisations polled also claimed not to be experiencing any financing difficulties, and more than half believed their rate of capital expenditure would continue throughout 2008.

Harvey Reid, partner at Laceys Solicitors, acknowledged well-off employers may be considering making job cuts at a time when mass redundancies were dominating headlines.

“It is certainly possible, and I do wonder whether unions could cope with the resulting flood of cases,” Reid told Personnel Today.

A source close to the KPMG survey said she suspected companies were making job cuts now amid feared recession claims in the hope they would not be so intensely scrutinised by unions busy dealing with many redundancy cases. However, the TUC and Unite warned employers would face a fight if improper actions were taken.

Roger Jeary, Unite’s director of research, said: “When employers seek to use an economic slowdown as an excuse for job cuts, they should be assured that we will defend members to the hilt, and that we have the resources to do it.”

Malcolm Edge, regional chairman for KPMG in the North, felt the idea that employers would take advantage of thinly-spread unions was “perverse”, but did not rule it out. “It would certainly be disingenuous of employers if they were to exploit the situation,” he said.

Employer groups were divided, with Gerwyn Davies, the Chartered Institute of Personnel and Development’s public policy adviser, stating that while there were no obvious current trends, unions would be “hard-pressed” to stop redundancies.

“The importance of unions is overstated, especially with private sector union membership levels under 25%,” Davies told Personnel Today. “But figures show redundancies are still running at near record lows, and many employers are turning to alternative measures to save money.”

The CBI insisted there was no direct link between companies reducing headcounts despite experiencing no financial difficulties.


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