Austerity plans affect staff morale even before cuts – study

7 June 2015

Announcing austerity policies leads to a drop in employees’ wellbeing before cuts are even implemented, according to research.

A group of academics looked at the impact of the UK government’s austerity budget cuts in 2010 on staff at government departments and found that just the announcement of the cuts led to an overall drop in public sector employee well-being, job satisfaction and engagement.

The 2010 Comprehensive Spending Review outlined plans for a 19 per cent reduction in budgets over four years to a host of government departments. The Office for Budget Responsibility predicted it would lead to the loss of 490,000 public sector jobs by 2015, representing about 10 per cent of overall public sector employment.

Nearly 750 public sector workers were surveyed before, two weeks after, and six weeks after, the spending review announcement to see the impact of changes.

According to the resulting paper, Feeling the squeeze: Public employees’ experiences of cutback and innovation-related organisational changes following a national announcement of budget reductions, there was an immediate drop in employee job satisfaction, wellbeing and engagement among public sector workers, following announcement of the cuts. The more changes were implemented over the next six months, the more they fell.

Tina Kiefer, of Warwick Business School, said that the announcement had a clear short-term impact, while the organisational changes themselves affected employee wellbeing, attitudes and behaviour over the longer term.

Public service employees responding during the two weeks after the policy announcement reported lower wellbeing and more negative attitudes towards job satisfaction and job security compared with participants who responded during the two weeks before the announcement.

“This is because participants responding after the announcement would have been exposed to budget debates across the media, as well as in organisational communications and discussions,” said Kiefer.

“The post-announcement group is thus likely to have spent more time reflecting on the implications of the budget reductions for themselves as employees and professionals.

“The announcement was likely discussed in meetings and coffee breaks, shaping a narrative about the impact of the budget reductions and having negative effects on attitudes and wellbeing.”

She said the study showed that public bodies may be more affected by what goes on outside the organisation than is typically assumed, as they are more at the discretion of outside changes and influences than firms in the private sector.

“It further highlights the fact that organisational boundaries are permeable and what happens outside them can have a big impact on those inside,” said Kiefer.

“This is notably the case for public organisations, which are to a greater degree inter-dependent on the external political, economic and social environment.”

The employees in the study underwent changes including redundancies, cuts in service provision, freezing and cuts in budgets plus merging of teams or services and had to find new ways of providing services and working in partnerships.

But the study found that not all the changes had negative effects on staff. When the spending review led to cuts in resources and numbers, workers’ well-being, job satisfaction and engagement dipped, but when innovative new practices were introduced to deal with the reduction in budget the researchers found a positive impact on morale and engagement.

Kiefer said: “Our results demonstrate that ongoing change can have positive outcomes for employees, if such changes introduce procedures and processes that are novel to the organisation, both with respect to internal processes and serving the public."

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