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Posted 10 March 2011

Recession: firms try to cut costs and preserve staff morale

Since the onset of the recession, 50% of firms in Ireland have introduced measures to control or reduce their paybill, according to a report published by the Labour Relations Commission.

50% have cut pay for some or all staff; 50% have implemented compulsory redundancies; and 20% have changed pension arrangements for existing staff.

And almost half of all firms have introduced curbs on overtime, short-time working, and more rigorous work regimes.

“While introducing multiple measures to reduce paybill costs, firms are trying to maintain the motivation and commitment of their staff by engaging in intensive communications programmes,” said Bill Roche, Professor of Industrial Relations and Human Resources at University College Dublin, who co-authored the report.

Although 45% of firms reported that unions were ‘realistic’ and ‘constructive’ in engaging with them in response to the recession, the study shows that many unionised firms avoided communications via unions when breaking news of pay cuts, reduced overtime, redeployment, and redundancies, to their employees.

“Our findings show that unions do not appear to have been able to exert much leverage on managements’ favoured measures for responding to the recession,” said Paul Teague, Professor of Management at Queen’s University, who co-authored the report.

“It appears that unions have been weakened by the recession.”

Only 5.1% of firms surveyed agreed that unions persuaded the business to change measures initially decided on to address the recession (e.g. from redundancies to short-term working), or that unions secured agreement on financial ‘claw-backs’ for their members when business conditions improve (5.6%).

According to union officials interviewed for the report, it is often difficult to decipher which companies are really in trouble, and which may be motivated to opportunistically ‘dilute wages’.

“Trade unions charged with defending their members pay and employment security face challenges without precedent in living memory,” said Kieran Mulvey, Chief Executive of the Labour Relations Commission, who introduced the report findings at a recent Labour Relations Commission conference on 23 February 2011.


An executive summary of the report “Human Resources in the Recession: Managing and Representing People at Work in Ireland” can be downloaded from the LRC website:

The report was co-authored by Professor Bill Roche of the UCD Smurfit Graduate School of Business; Professor Paul Teague, School of Management, Queen’s University Belfast, and Ms Anne Coughlan and Dr Majella Fahy of the UCD Smurfit Graduate School of Business.

444 human resource managers across the private sector and commercial semi-state firms with fifty or more employees were surveyed for the study. The study also involved focus groups with union officials from unionised firms and a series of case studies of firms implementing best practice HR response programmes. 


(Produced by UCD University Relations)


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