Firms ‘more likely to cut and outsource’ than last year, claims Irwin Mitchell report

by Graeme Brown, Birmingham Post, Jun 27 2012

Businesses are three times more likely to encourage voluntary redundancies and twice as likely to outsource loss-making services during the next 12 months compared to two years ago – according to a new report.

Law firm Irwin Mitchell conducted a study of with more than 320 senior business decision-makers, including 81 in the region, and also found that a third of businesses had made compulsory redundancies in the last year, with 75 per cent of those questioned also using a range of alternative cost-saving techniques.

As a result of the current economic uncertainly – highlighted by seven out of 10 firms saying that they are ‘less confident’ or expect ‘no improvement’ in the UK economy in 2012 – 54 per cent said that they are either clear about or uncertain about being under pressure to reduce staff overheads in the next year.

A total of 18 percent added that they were ‘quite likely’ or ‘very likely’ to make compulsory redundancies during the same period.

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

This compares to 16 per cent of companies who did the same during the last two years.

In addition, the survey 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.

Birmingham Post Legal columnist 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 focussed on some form of redundancy programme.

“Perhaps this is an indication that they think that they have now exhausted alternative solutions.”