'90% is better than nothing'

15 July 2009

16 July 2009 | Allie Anderson

Purchasers working without pay to safeguard their jobs has set a precedent in the downturn. Allie Anderson asks whether there are alternatives

As the recession persists, UK companies are looking for alternatives to redundancies in an effort to slash costs. Measures including reducing staff hours and cutting salaries are becoming a reality. This month BT staff have been offered 25 per cent of their salary in return for taking a year's leave, while British Airways employees were asked to work part-time, take unpaid leave or work without pay.

As SM reported, the "vast majority" of buyers at the airline volunteered to sacrifice their salary for a month (Web news, 9 July).

And it seems other purchasers would be willing to take similar action. The latest SM100 poll revealed 52 per cent of buyers would take a pay cut to help their organisation through the recession (News, page 9).

Brian Grew, supply chain director for Live Nation, says purchasers are almost obliged to pitch in. "In procurement we need to be conscious of our place as guardians over the cost structure of the organisation - to refuse would be incompatible with our role," he says.

Interim procurement manager David Taylor adds: "If the company is in such dire straits we need to take a 10 per cent cut, then 90 per cent of something is better than 100 per cent of nothing."

However, when faced with considering accepting a pay cut, many buyers are asking: "If I make the sacrifice now, will I benefit in the future?"

A number of the SM100 respondents expect their organisation to reward them for their sacrifice when economic conditions improve.

Clare Huber, purchasing manager for roofing firm Varla, thinks companies should "incentivise staff by offering their loss back in an end of year bonus when the good times roll".

Nigel Coghlan, purchasing manager at Itron Metering Solutions UK, suggests extra holiday or flexible hours would be a fair exchange.

Athough some buyers opposed an outright pay cut, they still saw the need for compromise to prevent redundancies. Cristian Martin, procurement and contracts officer for the Commonwealth Secretariat, wouldn't work for less pay, but he would consider alternatives that could benefit both parties. He suggests a scheme for employees to offer up some of their salary in return for shares, or a paid three-day week with the other two spent in unpaid training that would result in an "educational return to the business".

The CBI has tabled its own idea, urging the government to implement an "alternative to redundancy" (ATR) scheme. This would involve staff taking up to six months off and receiving a government payout equal to Jobseeker's Allowance, which in turn is matched by the employer. The employee could return to work on full pay when the ATR period expires, or sooner if business picks up, CBI says.

Although businesses are working to preserve positions by cutting pay and introducing flexible working, the CBI says that more needs to be done to save jobs - and firms - in the longer term.


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