Employers to Increase Redundancies

Small Business Redundancies expected to increase

The number of employers planning redundancies increased by 5% between the second and third quarter of this year, according to research by the Chartered Institute of Personnel and Development (CIPD).

Small Business Redundancies expected to increase

The survey showed that 27% of businesses are now planning to make redundancies compared to 22% last quarter. However, this still falls short of the 38% of employers that planned redundancies from November 2007 when credit crunch fears first emerged.

CIPD public policy adviser Gerwyn Davies said that redundancies can hit small firms harder than larger firms and that they should be a last resort.

“The impact of redundancy is great for all firms, but redundancy has a greater impact on smaller firms because it can really affect staff morale,” he said.

“There is a temptation to make redundancies in tough times, but it should be the last resort because that person you’re losing could be very difficult and costly to replace further down the line,” added Davies.

“You can minimise the risk of redundancy by using the collective spirit that a lot of small firms have,” he continued. “You can consult staff on working hours, bonuses, wages and flexible working – some people may want to volunteer for part–time working.

“If you do have to make redundancies, keep your employees in the loop at every stage, so that it doesn’t come as a big shock,” added Davies. “Make sure that those you make redundant are leaving with dignity and with as much support as possible.”

The research also revealed a recruitment slowdown. Despite the month of September traditionally being the most buoyant time for recruitment, the survey showed only 29% of employers are planning to increase staff levels – compared with 37% in Q2.

According to Federation of Small Businesses (FSB) spokesman Stephen Alambritis, while most small firms are not recruiting new staff, they are maintaining current employment levels.

“We’ve surveyed our members and 90% have said they probably won’t grow in the next year,” said Alambritis. “But we’re not experiencing as much doom and gloom as the survey suggests.

“The smallest businesses are surviving quite well,” he added. “They’re doing everything they can to avoid redundancies and their staff appreciate that. They’re looking at their costs, at the benefits and at the pensions, in the interests of making sure the jobs are retained. However, 40% said they might make redundancies in the future.”

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