Recession redundancies vastly underestimated by employers

Almost half of employers vastly underestimated the number of redundancies they would be forced to make in 2009, according to research by Personnel Today‘s paid-for sister service XpertHR.

The survey of 268 employers – covering more than half a million employees – on job cuts made during 2008 and predictions for 2009 revealed a huge shortfall in their original calculations.

Between them, they predicted they would have to make 2,522 redundancies in 2009. But, according to a matched sample of 91 organisations that completed a repeat survey in July, the actual figure will stand at 6,932 – almost three times higher than anticipated.

Four in 10 employers (40%) found they had underestimated their figures and had to make more redundancies than expected, and 11 organisations that had originally intended not to make any redundancies at all in 2009 found that job cuts were required. In January 2009, 58% of employers believed that they would have to make job cuts to survive the economic downturn. Yet this figure rose to 67% by the summer, and job losses caused by internal restructuring increased by 12% to 66%.

The job cuts were also found to be taking their toll on those left behind. Three in five employers (61%) reported lower morale as a result of redundancies in 2009 – an increase of almost 10% on predicted levels – while a further one in four (23%) believed their organisation is now missing out on necessary skills. And two adverse reactions reported in the repeat survey that didn’t come up in the first survey were poorer decision-making among employees (reported by five organisations), and increased absenteeism (reported by three organisations).

Moreover, despite tentative talks of economic recovery, the findings indicated that there might be more redundancies to come. In a separate IRS survey of 55 employers, 57% had made redundancies during 2009 and expected to cut more jobs in 2010.

The top three reasons cited for making redundancies during 2009 were external economic pressures (77%), cost-cutting (58%), and restructuring for internal organisational reasons (54%). Steps taken to minimise redundancies included across-the-board pay freezes (76%), suspending bonuses (21%), and voluntary redundancy (57%).

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