According to the latest poll, over two-fifths (44%) of employers looking to make cost savings in their workforce are planning to restructure or make redundancies in the next 12 months amid rising costs.
WorkNest’s survey of 404 employers across all sectors found that just over a quarter (27%) of SMEs admitted they’re finding ways to make cost savings within their workforce in 2023. However, over a third (35%) of employers are still undecided if the cost of living crisis will mean making cuts in the next year.
Additionally, three in 10 (30%) SMEs revealed there were looking at freezing employees’ pay in the next 12 months. While this isn’t a surprise with the increase in costs SMEs face with rising energy bills and inflation, this is, unfortunately, a considerable worry for employees, who are also struggling with their rising living costs.
Reducing employees’ hours or pay by changing T&Cs is what 13% of employers plan to do next year, while 11% want to scale back employee benefits.
Tina Hyland, Employment Law Adviser and Solicitor at WorkNest, commented on the results, “2023 is going to be a challenging year, especially for SMEs that are feeling the pinch, more so than larger businesses which can forefront some of the costs to an extent.
“Unfortunately, this does mean employers will be looking to make some difficult decisions, such as making redundancies or restructuring the workforce, as staffing costs are usually a significant expense for a business. Suppose that’s an avenue they decide to take; in that case, employers must be prepared to negotiate with employees to ensure they receive a fair deal.
“We highly recommend businesses reduce the chances of making any employees redundant by making alternative choices where possible, including implementing pay freezes or reducing benefits. However, each option comes with its own risk, so obtaining proper legal advice is critical in making the right decision for your business while minimising the negative impact on employees.
“Unfortunately, in the context of the recession, any cuts inflicted on employees due to employers’ decisions, such as restructuring or pay freezes, may be detrimental to employee’s mental health, especially with further worries to their financial wellbeing throughout this time. Supporting employees with additional benefits that might be available to them already, including Employee Assistance Programmes to retailer discounts, could help improve an employee’s bottom line in other ways.”
*Poll carried out by WorkNest