Midlands firms considering redundancy programmes as recession bites

WEST Midlands businesses are three times more likely to encourage voluntary redundancies than they were two years ago, according to a new report by law firm Irwin Mitchell.

And they are twice as likely to outsource loss-making services during the next 12 months.

The study of more than 320 senior business decision-makers also found that a third of businesses had made compulsory redundancies in the last year, with 75% of those questioned also using a range of alternative cost-saving techniques.

Out of those businesses stating that they needed to reduce their employee cost base over the next 12 months, 55% said that they would introduce a voluntary redundancy programme.

The survey also found that firms are more likely to cut down the use of agency workers, freeze pay, grant unpaid absences, remove other benefits such as bonuses and reduce staff hours in the next 12 months compared to two years ago.

Fergal Dowling, employment partner at Irwin Mitchell’s Birmingham office, said: “Businesses across the West Midlands have been using more inventive solutions than redundancy when tackling staff costs but more now seem to be focused on some form of redundancy programme. Perhaps this is an indication that they think that they have now exhausted alternative solutions. 

“Nevertheless, there are signs of more inventive thinking. Many alternatives can involve changes to employment contracts but well planned and executed change programmes can succeed. 

“The significant increase in potential outsourcing also shows that some businesses are taking a wider view of the economic downturn. Challenging times create inventive solutions.

“Organisations appear willing to try alternative approaches but with the economy showing signs of further contraction and levels of uncertainty increasing, businesses seem to be combining these with more structural and traditional changes to their workforce.”