How big a pay cut would you take? 6

[ajack1]

Having done the festive rounds meeting up with friends and family I don’t normally see on a regular basis I was very surprised how many were already feeling the recession.

Throughout a variety of jobs in different sectors many were on either on extended holidays, working a short week (some on full pay some not) or facing pay cuts and or redundancy.

I have not heard of short working weeks or pay cuts in the UK for many years now and it got me wondering, how many on here would take a pay cut (and how much) or a short working week in order to save their, or others jobs?

Or how many feel they are totally safe, or could go out and match what they are on in the current market place, or even would not take a pay cut under any circumstances?

 

[cedarbluffranch]

I work at a union shop (one of the few unionized engineering workforces) so it's a moot point - my contract stipuates the pay and I don't think the union would agree to a pay cut under any circumstances. Instead, my company will simply do a massive layoff of probably around 12,000 people in 2009.

I think that a massive layoff is surely better than a pay cut, right? Well, maybe for those who will keep their jobs and union leadership.

 

[ivymike]

It depends on the circumstances. I've recently had a few very enticing headhunter calls, so I'm not feeling particularly inclined to take a pay cut w/my current job. If it seemed a bit colder out I might take a very substantial pay cut to keep the bills paid while I looked for a greener pasture.

Regardless of the economic conditions, I might be easily persuaded to work 3 days/wk for 3/5 of my salary... that'd cover the bills, and I'd certainly be able to fill the extra days with fun stuff.

 

[ScottyUK]

ajack,

Being from a utilty background I feel pretty safe, certainly much safer than I did in production. My industry is losing people to old father time faster than they can replace them, so I feel relatively secure and will do for as long as the industry faces a desperately under-supplied job market. I'm actually in consulting right now - about as vulnerable as it gets - but if things go to hell then I'll be back on plant pretty quickly. Worst case is that I would end up working away from home, maybe overseas. I think it's unlikely with my group about to lose three out of five engineers to retirement, but the fallback plan is reassuring.

I saw the back end of the last recession when I was working in manufacturing. I am not surprised to hear of the short weeks, much as I hoped I'd never hear of them again. My memories of those hard times haven't faded and the feeling of despair which ran through the staff as the lines shut down is still quite fresh many years later. I am pretty sure that the lads in the steel industry are expecting short weeks, a pay cut, or both to protect their jobs and perhaps delay the inevitable for another year or two. In my opinion it is better to be working at a lower salary than not to be working at all; if I was in that position I would take the cut if asked while looking for alternatives.


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If we learn from our mistakes I'm getting a great education!

 

[cry22]

I am not busy at work but I still feel safe, very safe.

Thanks to the Dot.com era that sucked in every student to IT in the 90's, you can hardly find a good Engineer around.

The employer knows it, today a company can survive only if it has the talent, and talent is a precious commodity nowadays.

If you are that sought-after talent, you should not worry about it. I wouldn't take 3days/week, imagine, that's almost a 50% pay cut.

 

[davidbeach]

As a utility protection engineer in a group of 5 where 3 of the 5 will be retired in the next 5 years, I'm feeling pretty good about job security. Like ScottyUK says, there are too few of us.

 

[ivymike]

"I wouldn't take 3days/week, imagine, that's almost a 50% pay cut. "

ha. a 40% work cut too!

 

[ctopher]

When I hear that the US Congress and my county supervisors will accept a pay cut, then I will take one myself.

Chris
SolidWorks/PDMWorks 08 3.1
AutoCAD 08
ctopher's home (updated Aug 5, 2008)
ctopher's blog
SolidWorks Legion

 

[corus]

Taking a pay cut per se isn't such a good idea as it's difficult to get back what you have lost. Working for low wages suddenly becomes very attractive to senior executives who can see even bigger bonuses for themselves. If the pay cut was in return for a reduced working week then I'd find that tolerable. I'm not sure how someone younger with a mortgage on their house would manage with only 50-80% of their wager coming in, but then if it meant that eventually you'd be living in a cardboard box but still keeping your job, then it must be better, surely?

corus

 

[ScottyUK]

Hey corus,

Have you any idea what the situation is for the Lackenby & Redcar works? Some of the rumours filtering through don't sound too good. Hope your site is not facing the same.


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If we learn from our mistakes I'm getting a great education!

 

[asixth]

ajack,

The recession has myself concerned as well. I am positive that the world is not operating any different than what it was 12 months ago and that this entire economic crisis is just public opinion.

I would not accept any pay raise which is less than inflation so I would only accept a pay cut if inflation is in the negative.

 

[corus]

ScottyUK,
I'm not entirely sure what is happening on the main sites, but did hear that in Holland the company were laying off people and would pay 30% of the salaries, whilst the government would pay the remaining 70% of the salary until they returned to work. I'd presume this was so that the company would keep people on the books (and off the dole) and not have to re-recruit again when the economy turned at some time in the future. The Indian owners also approached the UK government but were shown the door. The same owners have of course since bailed out Jaguar etc., which will in turn help other industries who supply them.



corus

 

[PEDARRIN2]

My job is safe - although others in my field are not so lucky. My company has diversified itself well to take advantage of a lot of different markets as well as getting into developing markets (3D design and sustainability).

But, in my opinion, if it is a choice of a pay cut or a layoff - if there is little or no real possibility of getting a comparable job anytime soon - I would take the pay cut.

Something positive coming in is better than 0.

 

[IRstuff]

Back in the Silicon Valley recession of the 80s, we got pay reductions in the form of working 40 hrs for 32 hrs pay, and getting 2 weeks off at Christmas, unpaid., but that eventually turned around, which then led to the dot.com bust, when then led to the latest crash. I switched back to defense, and we've had only one major layoff cycle in start of the 90s, which was actually fueled by a run-up in defense spending, resulting in mergers that led to the trimming of "excess" personnel.

TTFN

FAQ731-376

 

[corus]

I stand corrected. News today is that in Corus employees in Holland will work a 4 day week, and the government will pay for the remaining 5th day, ie. a reduced working week but on full pay. The agreement will last for a maximum of 6 weeks.

I think I'd accept that.

corus

 

[ScottyUK]

That's a pretty good arrangement although I don't think six weeks is going to see a big shift in economic conditions. At least it gives some breathing space to the workers affected. I assume the plan after that is 4 days / week at 80% pay?


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If we learn from our mistakes I'm getting a great education!

 

[MedicineEng]

The problem of accepting pay cuts is that you open a Pandora's box. For line workers which their output is mainly physical products, a short week corresponds to the same percentual decrease in output. But for workers which output cannot be directly linked to an output, thie will be difficult to assess. The top management will try that you work 4 days, produce the equivalent to 5 days and receive 80% of the salary. Once they see that they can do this, then the drive to maintain the things long after the recession pass is very big.

 

[ajack1]

It is interesting to see the different points of view. Perhaps unsurprisingly the person I spoke too that felt safest, outside of government employees, was also in the utilities sector, but even they were laying off sub contractors.

It is hardly the worlds best kept secret that automotive is in a real mess and I foresee really hard times ahead in this sector and whilst no one would willing take a pay cut, unless maybe taken with a shorter working week and even then it would depend on personal circumstances, I wondered how many would see this as the lesser of two evils?

I found MedicineEng reply most interesting in the fact that management would expect people to continue to do five days work in four days after the recession was over, does that not actually imply that they are currently overstaffed and that good management should be laying staff off now in order to protect the majority of employees and the company itself? Can any company exist in the current climate that carries a 20% unnecessary cost?

Anyway keep the views coming and a happy and prosperous new year to you all.

 

[jmw]

There must be a formula somewhere that says just how profitable a "bad company" can be in a gorup of otherwise profitable companies.

Recession or not, diversification is a means by which companies can get a piece of the action across a range of markets, one of which will always, recession or not, be in trouble.

Automotive and aerospace companies seem the most popular choices.

So, you take a profitable company and tell its workforce that "times are hard" (a genuine recession is always a great help but not strictly necessary) and warn them that there must be "savings across the group".

This equates to:
A downturn in recruitment followed by actual cut backs. Cut backs means the same amount of work is expected to be done but with fewer people ergo you now do two or three peoples jobs for your one salary and you should be "thankful to still have a job".
Next comes the less than COL pay rise followed by delayed pay rise the following year and none at all the year after.

After a good few years of this the financial benefits to the group of having an automotive or aerospace albatross in the group must be rather significant.

Of course, if aerospace recovers, the company is in the soup unless they have another albatross that can go "into recession". In the case of one company I worked for the aerospace business did pick up (I wonder if it was ever as bad as they said it was) and with no other albatross, they sold the aerospace group for a fortune and shared out the cash amongst the shareholders.

The workforce? Not even a thank you. No additional staff to take back any of the extra load and certainly no restoration of the status quo.... the new lean and fit condition was the status quo and come pay rise time, back to a basic COL rise but based on depressed salaries.

Yes, when there is a recession, companies are genuinely in trouble.

I'm just saying that some companies milk it for all its worth and when the recession is over you can be sure the fat cats will have their cream but the workforce that made it possible will get nowt.

PS how can high street companies offer 70% discounts now that they are panicked? Does that mean that they have been making huge margins all the while?




JMW

http://www.ViscoAnalyser.com

 

[ScottyUK]

Hi ajack,

I guess it depends on how long people think the recession is going to be - I wouldn't relish the thought of working at 20% overload for more than a month or two. In my experience and in my industry most people can take an overload of maybe 20%, perhaps 50%, for a short period without too much detriment to the quality of their work or to their health. For a few days at a time I've worked double shifts - 100% overload - when we've have really been up against it. In the long term overwork is detrimental to both quality of work and the employee's health. Tired people make mistakes - in most industries mistakes cost money; in some industries mistakes get people killed.

A good management should make sure there is always a little spare in hand, perhaps just 1% or 2%, in order to deal with the unforeseen and the unexpected without compromising safety. Are margins in manufacturing are so tight that 1% spare is too much to carry?


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If we learn from our mistakes I'm getting a great education!