Press Release

One in two workers is an unsung hero of recession

20 November 2009

Half of UK workers have taken actions that help companies survive the recession, according to research commissioned by R3, the insolvency trade body. By accepting pay freezes, working longer hours or making other changes to their work patterns, they are helping companies stay afloat and preserving jobs.

The poll commissioned by R3 shows that during 2009:

o One in three workers have worked overtime or longer hours without extra pay;

o One in ten have deliberately not asked for a pay rise in view of the recession;

o One in ten have taken unpaid leave;

o One in ten accepted a pay freeze;

o One in ten did not receive a bonus that they expected to receive;

o One in two people who work have taken at least one of these actions.

Insolvency Practitioners think these actions can play a key role in helping a company prevent insolvency. 42% of R3 members believe these activities can be the 'magic bullet' to help save a failing business and 91% think they can be helpful as part of a package of measures.

Peter Sargent, President of R3, says: "These people are the unsung heroes of the recession.

"Their personal sacrifices can help businesses survive the recession and, in some cases we've seen, they've made the difference between survival and collapse.

"A few people in a company taking pay freezes in the short term can prevent insolvency and job losses in the long term.

"With record numbers of insolvencies and rising unemployment, these people make a significant contribution to their companies, their colleagues and the economy as a whole."

Case study

LM Logistics Group Ltd (Shipping and freight forwarding organisation), Felixstowe

Tony Barnes, Managing Director:

"As a leading Warehouse and Logistics provider, LM Logistics faced a difficult time as the recession set in due to our high overheads and a heavy reliance on import volumes which decreased significantly as a result of the downturn. We are based in Felixstowe and we warehouse and transport our customers goods imported from around the world. We now have a very positive future ahead of us thanks to many parties, in particular our staff.

We were victims of the economic situation that has caused so many problems to so many companies over the last 18 months. All our staff agreed to an 8 % reduction in their pay earlier in the year with a couple of people taking voluntary redundancy. A Company Voluntary Agreement (CVA) has now been agreed so we're heading towards a full recovery. The CVA has enabled us to stabilise the business and provide a stable platform for investment, which has now been secured. This would not have been possible without the fantastic support of the staff.

It is testament to the belief in the company by all parties, in particular the staff, who have all played their part in helping the company through this difficult time. I can't praise the staff highly enough for the support and commitment they have shown in helping to secure the long term future for all concerned."

Adrian Hakes, Member of staff

"When the announcement was made that the entire work force was to take an 8% reduction in pay, many staff including myself were nervous about their futures. My initial feelings were that although nobody wishes to take a pay cut, it was the only option at the time to try and protect the company and as many jobs as possible.

This must have been a very hard decision for the senior management to take and would not have been done unless extremely necessary. I have been an employee at LM Logistics for 3 years and can say nothing but good words regarding the way in which the company looks after all its staff. I believe that now the company has a stable footing, it can move forward and enjoy many successful years ahead."

High profile cases in 2009 include:

According to press reports, the following companies all asked staff to make personal sacrifices to secure the company's long term future:

Honda: In August, Honda's Swindon factory announced it was closing down for a four-month break – staff were asked to take a cash payout to leave and those who remained were paid in full for two months and at 60% for the next two months.

British Airways: British Airways pilots accepted 2.6% pay cuts. In return, they received shares in the company in three years time worth £13m. Also at BA, 7,000 staff agreed to take part in cost-saving measures, including 800 who said they will work unpaid for up to a month. Most opted for unpaid leave.

BT: BT said they would give staff an upfront sum of 25% of their annual salary in return for taking the entire year off. Staff were also given the option of a one-off payment of £1,000 for going part-time.

KPMG: asked its staff to move to a four-day week or take sabbaticals on 30% pay, to stave off a redundancy programme across the firm.

McGrigors: the Scottish law firm which employs 700 people across the UK, asked staff to take two weeks off without pay between June and the end of its financial year on 30 September. Salaries across the firm were frozen until October 2010.

Wragges: the law firm has seen more than 20 associates take up sabbaticals and extended maternity leave as the firm attempts to avoid the need for further losses.

Gleneagles, owned by Diageo Plc: sent letters to 700 employees in January asking them to consider voluntary severance, unpaid leave, reduced working hours or early retirement.

Thorntons: offered sabbaticals and shorter working weeks.

Esh Group: Top executives at one of the region's largest private businesses have taken a 30% pay cut.

Leyland: announced 250 job losses and an extended factory shutdown over Christmas 2008 because of a "severe decline" in demand.

According to the CBI, nearly two-thirds of employers are operating some form of recruitment freeze and 45% have introduced more flexible working.