Tuesday 2nd September 2008
Firms warned about job cuts

Making job cuts during the current economic climate will cause a series of problems for firms, according to consultants PricewaterhouseCoopers (PWC).

Debra De'Ath, director at PWC, claims that while firms may be tempted to make large scale redundancies in order to save money during the credit crunch this may come back to haunt them.

"Reducing headcount can be a knee-jerk reaction to difficult trading pressures but organisations need to remember making redundancies can prove costly," she said.

According to Ms De'Ath, firms may struggle to pay their employees compensation if taken to a tribunal and will find it hard to recruit when the economy starts to recover from the downturn.

In a bid to cut costs, firms should offer their employees options such as share plan deductions and salary sacrifice arrangements instead of resorting to redundancies, claims Ms De'Ath.

"In a difficult job market, some people would rather keep their job under a different arrangement, such as with reduced hours, rather than be unemployed. Strategies like this also mean that when the market picks up it is easier, cheaper and quicker for companies to react," she concluded.

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