Recession redundancies vastly underestimated by employers


Redundancy predictions made by employers at the start of the year fell well short of the actual number of job cuts they needed to make – by as much as a third, Personnel Today can exclusively reveal.

Four in 10 employers vastly underestimated the number of job cuts they would be forced to make in 2009, research to be published next week by Personnel Today’s paid-for sister service XpertHR, has found.

At the start of the year, employers failed to appreciate the scale of cutbacks required to survive the recession – in January, 58% felt they would need to axe jobs to cut costs, but this rose to 67% by the summer, and job losses from internal restructuring rose by 12% to 66%.

One manufacturing firm cut eight times as many jobs as predicted, rising from 500 to 4,000, although employers’ predictions were, on average, short by a third.

Matilda Venter, director of HR services at professional services firm PricewaterhouseCoopers, said a lack of experience among HR professionals dealing with large-scale change could have led to poor workforce planning at the start of the year.

She told Personnel Today: “The initial number of job losses [predicted] could have been more of a knee-jerk reaction to cut costs rather than a well-timed, well-thought out response to the year ahead. A lack of experience could have contributed to that reaction.”

But, she added, external economic factors changed so quickly that most employers were right to immediately cut some jobs early on, “buying themselves some time” to figure out how else to save costs.

The survey showed steps taken to minimise redundancies had risen beyond employers’ original expectations, such as freezing recruitment (up 20%), redeploying staff (up 19%) and encouraging more flexible working (up 14%).

Noelle Murphy, an XpertHR editor, said the results indicated employers had learned from previous recessions to cut jobs only as a last resort. She said: “Some employers have been more cautious in their approach to job losses, having cut too many jobs in previous downturns only to be ill-equipped with the right skills in the workforce to meet a swift upturn.”

Clare Kelliher, senior lecturer in strategic HR management at Cranfield School of Management, agreed. “Employers have learned lessons from the last recession having gone through downsizing. Some struggled to cope with the upturn – that is why we’ve seen an increase in flexible working arrangements, to keep hold of key staff.”

During January 2009, XpertHR surveyed 266 employers, covering 500,000 staff, who between them predicted they would have to make 2,522 people redundant this year. By the end of 2009, the actual figure will stand at nearly three times that amount – 6,932 – according to a matched sample of 91 organisations that completed a repeat survey in July.

The full survey results will be published on 19 October. Go to

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