Many firms set to make 9% job cuts

ALMOST half of business managers expect to cut their workforces by 9% this year, a detailed study by human resource management experts at Deloitte & Touche reveals.

The survey of 303 Irish business managers shows 53% expect economic conditions to deteriorate over the next six months, with 42% expecting a reduction in numbers employed. The average expected decrease in staff numbers is 9%. The survey found 80% of business managers feel wages and salaries are their single biggest source of expense.

“By contrast, only 9% felt raw materials represent their main cost,” the survey’s authors said. Just 38% of businesses feel that pay inflation is one of their top three challenges.

“Despite this, business managers are split on a national wage agreement with 45% agreeing a new national wage agreement will curb wage inflation in their industry and 35% expressing disagreement,” they added.

Commenting on the results Deloitte & Touche director John McGarry said: “Many employers are moving towards performance-driven approaches to pay management which can involve linking overall pay to company and individual performance,” he said.

Meanwhile, European unemployment rose to its highest level in more than three years in March, as companies such as Alcatel SA, the world’s biggest maker of broadband equipment, cut costs to return to profit.

The unemployment rate in the 12-nation euro-zone rose to 8.7%, the highest since February 2000, from 8.6% in February, the EU’s statistics office said.

Consumers, whose spending accounts for over half the region’s economy, will probably buy less as dole queues lengthen, making it harder for growth to pick up.

February’s unemployment rate was revised from an April 1 estimate of 8.7% to include more recent Spanish data. The Irish unemployment rate is currently 4.5%.