Recession creates new employment landscape
More flexible working hours, extended shut-downs, extra holiday and cuts in paid overtime have all become more commonplace as the recession has deepened and firms have become determined to cut costs.
John Cridland, CBI Deputy Director-General, said: "This has been a particularly bruising recession, but one of its most positive and striking aspects hasbeen the commitment of many businesses and their staff to work together to try to trim costs and save jobs. "The UK's flexible labour market has proved a huge asset during these testing times, and flexible working changes have enabled employers and staff to create leeway on working hours. "While pay and recruitment freezes should disappear as the economy recovers, the spirit of flexibility and the willingness of many staff to engage positively with employers on these issues will hopefully be a more permanent benefit of the UK economy."
The UK-wide survey, whose 704 respondents employ a total of 3m, showed that the recession and rising unemployment have taken a severe toll, with over half of employers (55%) indicating that they were going to freeze pay during the next pay round, while 39% expect to make a modest increase.
Many employers are standing by their staff training, and two thirds want to target training more efficiently. In cases where jobs could not be saved, individual redundancy payments have averaged around £12,000.
Nearly two thirds of employers have frozen recruitment either across the whole organisation (30%) or in parts of it (31%). Firms are uncertain about prospects for a recovery in recruitment, though 53% think it will take up to two years or more for recruitment levels to return to 2007 levels.
Graduates also face a tough time as two fifths (38%) have frozen graduate recruitment, and a further 10% are recruiting fewer graduates than in 2008. However, recruitment remains resilient in the public sector and in professional services, while one in six employers are offering internships and placements.
45% have increased flexible working among staff to reduce hours and meet employee requests for a work-life balance. A further 24% are considering or intending to make increases. Making a flexible response to falling economic demand, a third (33%) of employers have cut their use of agency staff, while 43% have reduced paid overtime.
Albert Ellis, CEO of Harvey Nash, said: "The recession has led to fundamental changes in the way employers recruit, motivate and develop employees, and UK plc must act fast to keep highly skilled talent in the UK labour market. Otherwise, we run the risk of conceding out competitive edge to other countries. "Without a more proactive approach to training, accommodating and retaining talent, businesses risk missing out on the next generation of skills needed to compete. We have a wealth of knowledge, experience and skills in the UK that must be nurtured and developed, even in troubled times, for the future of the British economy."
A quarter of organisations (26%) plan to transfer work overseas in response to the UK's downturn. This is particularly true of those in the science, hi-tech and IT sector, where 54% have either moved jobs, or are intending or considering doing so. This may be partly in response to skills shortages in these sectors.
To keep employees incentivised, 62% of companies have kept their existing bonus structure but, in the wake of the credit crunch, 46% of firms in the banking, finance and insurance sector have reformed their schemes.
Nine out of ten (90%) of firms said they would make no changes to their redundancy package because of the recession. The average redundancy payment was just over £12,100, though this varied greatly among sectors, from £21,300 in banking, finance and insurance, to £5,700 in construction. Organisational size was also a factor: redundancy pay was £23,700 in firms with more than 5,000 staff, and £5,200 in the smallest organisations.
Many firms (47%) are not changing their spend on staff training, and 9% are increasing it, but 44% are looking to cut training budgets to save money. Over half of firms (58%) are maintaining their apprenticeship programs, while 10% are expanding them. However apprenticeships can be a significant cost for many firms, and 23% are cutting numbers.
Almost all employers (87%) have called on the government to get credit markets moving more freely, while 64% believe a freeze on all new employment regulation is needed until the economy recovers.
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