The logical casualty is usually the labor force. As the work carried out within the business (both factory and/or offices) dwindles away, companies cannot afford to have staff being paid to sit (or stand) around doing nothing. The consequential outcome is redundancy.
Redundancy is a situation that many dread. Redundancy pay, or severance pay can sometimes help to soften the blow, but not in every case. Personnel policies often revolve around a LIFO (Last In First Out) policy and all too often this means that those who are the first to be made redundant are those who have not worked long enough to qualify for redundancy/severance pay.
The other problem at this point in time, of course is the worldwide economic slump. It’s the worst recession we have seen for decades (since the great depression). It has already resulted in thousands of businesses failing, with millions of workers losing their jobs as a result, or being made redundant as companies cut back. With unemployment as high as it is now (this is a worldwide phenomenon, not just the US), it is very, very difficult to find new employment.
There seems to be a popular misconception that redundancy only affects the lower paid workers, and that the higher paid executives get off more lightly. However, this is not actually the case, although it is easy to understand where this particular misconception springs from.
It is all to do with ratios. If you analyze the structure of any business, you will come up with the same pyramid shape of worker to management numbers, and corresponding pay scales. For example, in a manufacturing business you may have a factory work force of 500, and an office workforce of 100 broken down into 70 clerical/admin positions, 25 managers, and 5 directors. Immediately it is easy to see that the largest proportions (factory workforce and office clerical/admin) will yield the largest slice of casualties.
So if you apply a typical swathe of redundancy to this particular scenario, you might expect to see 200 factory workers going, accompanied by 20 office workers, 5 managers, and maybe 1 director. On the face of it, it all seems biased in one direction, but when you apply the rule of ratio, it evens out quite dramatically.
As well as the sheer logic of numbers and ratios, there are also the operational issues. With nothing to make it is bound to be the factory that suffers most, followed by the admin staff, with less clerical data to process, whereas the managers and directors duties may get reassigned to others in and attempt to become more efficient whilst still cutting the wage bill.
There is also the conception about the so called “fat cats” of industry; those directors and entrepreneurs who are on the mega bucks deals. There may be some truth in that the big bosses are unlikely to put themselves out of work, unless of course they themselves have even bigger bosses. But there again, one must always bear in mind that these so called entrepreneurs are the people who create the work in the first place. Without them there would be no jobs, and so they need to stay around and in employment for the benefit of all when the economy begins to start showing signs of recovery.
So you senior staff do suffer in these difficult times, not perhaps as many in terms of sheer numbers, but if you compare their relative total wage bills, there will be a much closer comparison to be seen.
