Total value of UK redundancy pay-outs start to fall as economy continues to recover
EMW says that the data, provided to them by from HMRC, shows that the successive waves of redundancies and restructuring that have hit the private sector over the last five years are finally beginning to ebb (see graph).
However, EMW explains that the continued cost-cutting programmes both the public and private sector means that the absolute total value of redundancy payments is still stubbornly high.
Despite the improvement in the economy, many businesses are still having to shed jobs to adjust to structural shifts in the sectors they work in. For example, Microsoft’s global restructuring, announced mid-July this year, will make 18,000 employees redundant and Barclays’ restructuring is set to cost 2,000 jobs in the UK.
EMW explains that the average pay-out per redundancy also remains high. The average redundancy pay-out this year was £13,396, which is virtually unchanged from the previous year’s £13,521.
The number of redundancy payments has fallen by 9.7%, from 355,000 in 2012/13 to 321,000 in 2013/14.
Jon Taylor comments: “It’s great to see that many businesses are now more financially stable and therefore in a better position to keep hold of staff. The drop in the number of payments and fall in the total cost of pay-outs shows that economic activity is getting back to pre-recession levels.”
“However, restructuring is still ongoing in some larger businesses in the UK. Turning around a major corporate can take years – which is one reason why the redundancy bill for UK employers has yet to fall significantly and may remain high for some time to come.”
“The fact that the size of the average redundancy payment has remained high also suggests that there are still large numbers of public sector redundancies taking place.”
“Public sector redundancy pay-outs tend to be more generous than those in the private sector due to the strong presence of unions, and the benefit of historical enhanced redundancy schemes.”
“The austerity cuts call for further public sector cuts to be made over the next two years, so it is likely that average pay outs will remain high for the immediate future.”