Workers made redundant could have to wait up to five years before their salaries return to the levels they were at before they lost their jobs, research has revealed.
Research by the Globalisation and Economic Policy Centre, based at Nottingham University, found that the closure of a firm causes the average worker to lose half of their income in the first year, 15% in the second and 10% in the third – taking five years to return to former levels.
Richard Upward, who led the research into the pay of 150,000 employees, warned that the losses would be greatest for men, older workers and those in manufacturing. He added that car industry workers would be particularly affected by this pay slump.
He said: “Our research found that losses were greater for men, for older workers and for workers in the manufacturing sector.
“Redundancy is a blow to anyone, but in the car industry it can be particularly serious. These are highly skilled workers – but their skill is making vehicles. Those skills are not easily transferable, and the brutal truth is many of these workers will struggle to earn as much again.”
Upward said retraining was the only means of ensuring that pay can return to expected levels more quickly.
He said: “The only way many of these workers will recover their current standard of living is by retraining, and any measure that can be introduced to re-skill them has to be considered.”
Last week Mercedes-Benz announced that it had cut 50 jobs from its factory in Northampton after rule changes in Formula 1 led to a drop in demand.