KEY POINTS:
Bubbles are bursting in economies around the globe and the employment bubble is one. Many companies already caught by the economic downturn are resorting to staff layoffs through redundancy. Where possible some are finding other solutions.
Helene Higbee, director of Higbee Schaffler, specialist remuneration advisers, Auckland, says while
most of the company's clients are looking at making staff redundant, some are doing their best to retain and redeploy people.
"Nearly everyone I have spoken to in the last couple of weeks is in a restructuring project," says Higbee. "Most are saying we are definitely trying not to make people redundant. It may mean we are going to redistribute resources where we can."
"In retail for example, where a firm may be top-heavy in part of their network, they may consider moving some of those jobs into a call centre.
"I think that's a really noble attempt but in fact many of our other clients are saying they are planning redundancies and just working through a consultation process, not dissimilar to what Air New Zealand are doing," she says.
Other belt-tightening activities are also under way such as hiring freezes, when people leaving are not replaced, and the company opts to do more with less. Budget reviews also look at ways to trim spending such as calling travel halts.
Robert Reid, president of the National Distribution Union, says they have been "right up to our necks" in redundancies. The NDU covers textile and clothing; the wood industry, wood processing, pulp and paper; driving; road construction; stores and retail, which he says is a concern for the New Year following the "fools' paradise" of Christmas.
"Our worry is that post-Christmas we'll see retail almost ... halt."
He says one of the problems is when companies come to the unions with proposals for redundancy having already done a huge amount of work to arrive at that decision.
"In all the major ones this year the decisions have already been made and the consultation period has been like, 'Well, if you can come up with a way to get us an extra $3 million this year ... we'll think about keeping the place open'. Workers and the union don't have that ability."
He believes more creative solutions would require companies to find a way of bringing the workforce and union into their confidence at a much earlier stage before they make the announcements. Otherwise consultation is a token gesture.
"If things are done earlier they have the combined wisdom of their staff and staff representatives to work through the problem and maybe come up with ideas and solutions."
The suggestion that employees buy the company with their redundancy payments is not feasible, he says, as this is throwing good money after bad where the company is already failing.
"People are much better to pay off mortgages or credit card debt or put the money in the bank," says Reid.
Higbee observes that some industries have declined very quickly with employers feeling they have little choice but to make staff redundant.
"While the idea of consulting people well in advance is a lovely ideal, in some instances it has happened too fast to do this."
From an Employer Manufacturers' Association briefing she attended recently, Higbee reports hearing that many EMA clients who had forecasted and planned to hold people until after Christmas are finding they are unable to survive and are making redundancies earlier than intended.
In cases where redundancy rather than closure is the issue Reid says the union pushes for voluntary redundancy first.
"That can pick up lots of people who are thinking of leaving or having lifestyle changes. It could be people approaching, or even over, government superannuation age. I think that is the most humane way of doing it but many companies are reluctant to do that because they say they don't want to lose their best people," says Reid.
He cites the closures of two Godfrey Hirst Feltex plants this year. The plant in Dannevirke went through two smaller redundancies and remains open.
"Both [Dannevirke] redundancies were able to be dealt with by volunteers and [managed] quite well."
Reid says the union always asks people to think carefully about volunteering.
"We certainly don't advocate it but there are always people whose personal circumstances allow them to do that." While the ambulance at the bottom of the cliff needs to be improved ("Work and Income are providing good support", if a bit rusty at first), Reid says the Government will have to do what it can to turn the crisis around at macro level by bringing infrastructure programmes forward such as broadband, roading, public transport and affordable housing projects.
Building new houses would stimulate the wood sector and provide more jobs for builders and construction workers out of work at present.
"That wouldn't trickle but rush back to reignite production in our timber companies. Traditionally National has been anti-interventionist but I think the economic situation will require them to take some measures like that unless they want to preside over a deep depression," says Reid.
Higbee believes that while 2009 is going to be "a shocker of a year", people are smarter now than they were in the 1930s. She advocates taking a more balanced approach.
"We have a tighter labour market now so we can't afford to shed just the most expensive people. In tougher times we need to look more at our productivity and how to get better outputs. We need to look at spending patterns and who is bringing in value rather than looking at it only from a cost perspective. And I don't know many who wouldn't take up a four-day working week option if they could afford to."
For the first time, younger generations will be in a position where job security isn't such a bad thing, she notes.
"Gen Y has never been through a recession before. They have been able to go out in a situation of tight supply and negotiate what they want even if it seems a bit extreme."
Another extreme is executive remuneration, more particularly overseas where governments such as the Swiss and the US are legislating controls.
"What are we as a society saying is important? Is it money and power, the age-old thing of everybody jumping to line their back pockets at the expense of sustainability rather than protecting the longevity of the business?
"We will still have a need for people and this is a chance to redistribute things as the baby boomers retire. We have to learn to do more as there are fewer people in the wake of the baby boomer bubble.'
Higbee advocates people being flexible and nimble, prepared to do different types of work and see where else they can apply their skill set, ``even if it means taking a lower-paid job for a while to put food on the table. Skills are very transferable and if you are good people will usually give you a chance."
Phil O'Reilly, chief executive, Business New Zealand, says while our banking sector is reasonably solid, the downturn resulting from the US financial markets' problems is beginning to have an impact here. He cites the recent example of Air New Zealand redundancies.
"Whether there will be large-scale redundancies here remains to be seen," says O'Reilly.
Business New Zealand has been involved in the tripartite ``Security in Change' discussions with Government and the CTU and will make recommendations to the consultation exercise planned for next year.
"A key consideration is the need for more flexibility within employment law to help prevent the need for redundancies in the first place," says O'Reilly. "Unnecessarily rigid requirements in the Employment Relations Act impose big costs on many small businesses. This can contribute to the inability of many firms to take advantage of business opportunities and can contribute to business closures."
He says Government can help by reducing unnecessary compliance costs imposed by legislation such as the Employment Relations Act, Holidays Act and others.
He believes involving employees in relevant decisions is always wise. "Two heads are always better than one. There may be some options that arise from good discussions between employers and employees - productivity improvements, for example - or more flexible work practices that could have the effect of making redundancies unnecessary."
