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Miles Brignall talks to van workers in Birmingham on half pay, IT contractors in Yorkshire on slashed rates, office workers in London rehired on 25% less, and the women suffering £400-a-month wage cuts because of equal pay rules
Few have felt the effects of the economic downturn more keenly than Gary Thompson. The 50-year-old, who has worked for the Birmingham-based van manufacturer LDV for almost 25 years, has not been paid properly since February, and along with 750 other staff, has just been put on half pay – taking his wage to just £150 a week.
The half-pay deal came into force last week in expectation of a return to production. Before that, Thompson's normal pay had been suspended when production halted just before Christmas. The company is still hoping for a bank-style bail-out to *allow it to resume production.
"It's been very hard, not just on me but on all the workers and, in particular, their families. I'd be lying if I said it hadn't," says Thompson, whose only other spell out of work was when the LDV previously had financial problems.
The panel-shop worker, who still rises at 6am to keep himself ready for when production resumes, says the financial uncertainty is the hard to deal with. Every penny spent is now analysed to see whether it is vital or not.
"I took out a mortgage protection policy that promised to pay in the event I was made redundant, but because we have been caught in the middle – not laid off, but not being paid either – I've been told that the policy won't pay out in our current situation," he says. (See Redundancy cover? Is it worth it?)
He says he is lucky in that both his wife and daughter are in work, though their future is not secure – they are employed by RBS, which recently said it would lay off 4,500 staff in the UK.
"I'm an old-fashioned sort of bloke. I see myself as standing at the front of my family shielding them from what the world has to throw at us," he says. "The fact that I'm not working has certainly dented that view of myself and now that I can't come up with my half of the mortgage, it is difficult to take."
He says the family have pared down all expenditure. "I've always done the shopping in our household – my wife says I'm better at it than her – and now I go round the supermarket with maximum economy in mind. My teenage son's football team are all going paintballing next week. The organiser said it was 'only' £20, which I'm sure is reasonable, but when you've only half your money coming in, suddenly £20 seems like a lot of money."
His biggest fear is losing their home. He says: "A few years ago we moved to a bigger house and I'm, for the first time, regretting it. If we had stayed where we were, we'd have almost paid off the mortgage – we haven't missed a payment, but it's always there at the back of your mind."
It galls him that the government has been reluctant to help LDV, while throwing huge sums at the banks. "It talks about promoting greener vehicles, but won't back its talk with the cash," he says. "At LDV we've got an electric van that's ready to produce, but nothing's happening. Meanwhile, we are caught in this horrible limbo."
Wages and salaries slashed
While many staff are seeing their pay levels reduced, those who have been forced to change jobs because of redundancy face the biggest wage cuts.
As unemployment rises, employers feel they can offer to pay less for the in-demand jobs that are still available – and the scale of the reduction can be terrifying. If you have a job, pray you can hold on to it, because your next one would almost certainly not pay as much in the current climate.
In Manchester, solicitors with 10 years' experience formerly earned £50,000 a year, but now have to take jobs paying £20,000.
Office workers in London who last year could have expected an annual salary of around £27,000 are currently lucky to earn £22,000 – if they can find a job at all. In the south-east, senior mangers laid off from jobs paying above £55,000 are having to take *salaries closer to half that.
Kathryn Riley, a director of recruit*ment company Douglas Scott, says jobs linked to property or finance are currently "on their knees". Her company, which specialises in legal work, sales and professional services, has stopped taking registrations from some jobseekers as it has too many on its books.
"There's no doubt employers are taking advantage of the downturn to lower salaries, and for some workers who are used to certain incomes the situation is a nasty shock," says Riley.
She cites the many large conveyancing "warehouses" that grew up across the north-west in the good times but in recent months have been shedding staff as the property market collapses.
"We've had solicitors with lots of experience, who used to earn £60,000 year, accepting junior claims-handling roles that are paying £20,000. In some cases, staff are seeing their incomes more than halved," she says.
"The general office market is so quiet that we have had to redeploy the person who ran the department because she had nothing to do. The temporary worker market is holding up a little better, but not much. Sales roles are suffering – it's pretty much the same across the board."
Maggie Frappola, who manages the Ealing office of the recruitment company Blue Arrow, says that, while salaries in the industrial sector are holding firm, office jobs in west London have all but disappeared.
"The rate paid for secretarial temps in this area has fallen from £9.50 an hour to £7.50. There's very little work around as companies seek to cut back on temporary staff. Permanent office jobs are now almost impossible to come by. This time last year we would have been placing 10 people a month with local firms, now we are lucky – and I mean lucky – if we find one person a month a full-time job. Those who do find jobs are being offered much less – salaries have fallen £5,000 a year in 12 months."
Frappola says wages for cleaners, warehouse workers, and catering staff have at least stayed the same, and the demand for workers remains. "Our work has moved over to those sectors as office work has dried up. Employers are increasingly choosing to take staff on rolling short-term contracts."
She doesn't say it, but the implication is that it's easier to shed such staff if there are later cutbacks.
Over at the Stevenage Blue Arrow office, it's a similar story. The town, 25 miles north of London, is interesting because it historically has had one of the lowest levels of unemployment in the UK, and could be thought able to resist the effects of the slowdown.
"Salaries are generally holding up, but employers have become extremely picky as to who they are prepared to take on," says the branch manager, Damian Ellis. "The current financial *climate means that they can now choose from a list of very good candidates – a choice that they might not have had in recent years.
"Perhaps the biggest change is the salary expectations of people looking for work. In the past, they might have expected to be taking home £30,000-£35,000. Now that same group are prepared to take jobs paying £10,000 a year less. They are being pragmatic – in most cases they have a family to support and often a mortgage to pay. We've just placed one man who was working as a call centre operations manager, earning £55,000, albeit in London. The job he's just taken was advertised as offering a salary of up to £23,500. It's a big cut."
Take it or leave it, employees told
Like thousands of other IT contractors, Julie Stewart (left), was recently given a stark choice by her employer: take a 10% pay cut, or face not having her contract renewed.
A highly experienced consultant, who lives in Scarborough, North Yorkshire, Stewart has worked in the IT industry for more than 20 years – mostly on short-term contracts. She says this is the worst financial climate she has seen.
Along with hundreds of other contractors, she was told last November that her contract with one of the UK's biggest insurance firms would only be renewed on a rate that was 10% less than she had previously been paid.
Since then, her fellow contractors, who are all paid a daily rate, have been told that they face another 10% cut in wages, on top of the existing reduction. Many workers at the firm have been told their three-month contract will probably not be extended after May.
"Along with most of the others, I took the view that 90% of something was better than 100% of nothing, and agreed to the cut. However, it has not been easy, and it's worrying. Unfortunately, the latest cut continues a long downward trend in IT wages."
She estimates that the rates being offered to contractors in 2009 are close to those paid in 1985. She now receives less than £300 a day. At their peak, the rates were close to £450.
"My husband has a retail outlet, so we are being hit on both fronts, although we are relatively lucky in that the children have grown up and it's just us and the dogs to provide for.
"We have certainly cut back on our spending. In the past we would go away at weekend and wouldn't think too much about what we spent. Now we're simply not going away."
She says that in a downturn lots of the IT people who are laid off tend to go freelance, putting even more pressure on existing contractors.
"I'm generally an optimist, but at the moment things can only get worse. From where I'm sitting it's going to be 12 months before things start to improve, and you fear for those of us who face a long wait to be taken on again.
"The problem, in a sector in which the technology is constantly moving on, is explaining a six-month lay-off to prospective employers."
In recent months, a number of high-profile companies have axed pay rates. Last week BT imposed the biggest pay cut on IT contractors in its recent history, slashing the day rate on some contracts with external IT staff by up to 30%.
According to John Brazier, managing director of the Professional Contractors Group's, market forces are dictating what is happening in the workplace.
"Members are being asked to take a cut in their rates. It all depends on which sector they are working in. It is increasingly tough out there for them and it's a question of riding out the storm – some would say that accepting a cut in rates and staying in contract has to be preferable to not having a contract at all. Only those possessing the rare skills may well feel it is worth standing their ground."
How come the poorest workers are paying the highest price
Thousands of council workers across the country are facing severe pay cuts this year as a result of equal pay legislation and the continued effects of the credit crisis.
After a decade-long campaign to get equal pay, councils across the land have been forced to regrade thousands of jobs to make sure those of "equal merit" receive the same pay.
While many low-paid workers will benefit, one of the unintended consequences has been that thousands of workers have been told they are to have their pay cut – in many cases by up to a quarter. Some workers will lose up to £11,000 a year as a result of the regrading exercise.
Almost 1,700 workers – around a quarter* of the staff – at Rochdale Council, were told by letter just before Christmas* that they face significant pay cuts following a pay review. Under the plans, 1,694 (25% of the total staff) will have their wages reduced. The average drop in pay will be £2,300 – which comes into force within the next 12 months.
The letters and subsequent dispute have left morale at the council "lower than rock bottom", says Helen Harrison, branch secretary of Rochdale Unison. "The equal pay act was fought for for years, but no one intended that staff would see pay cuts as a result."*
She says many of the staff who face losing pay are devastated. "These are not city high-flyers. These are normal working people, mostly at the lower end of the pay spectrum. How are they supposed to accept a £4,000 pay cut?"
Jane Lorimer, a mother-of-three (above, left), told her local* paper, the Rochdale Observer, that she stands to lose almost a third of her £15,000 a year salary.
The 45-year-old, who works as an out-of-hours call centre worker, was devastated when she received a letter* stating that she's facing a £400-a-month pay cut. She fears that many colleagues* could even lose their homes if the review is given the go-ahead.
"I've given nine years' service to the council and I think this shows that I'm just not valued. It makes me feel physically sick. I have a mortgage and a family to support so how can I afford to lose nearly £400 a month?
"The frustrating thing is that I'm a low-earner and this kind of a wage cut will hit me really hard."
Sharon Gurney-Taylor (above, right), who works for the Impact Partnership and was told that her salary is likely to be reduced* from £19,000 to £13,000 a year, says: "I cried when I got the news because it was such a shock.
"It would mean I'd be earning about the same as I was earning 10 years ago for the council. I have worked here for 19 years and this is no way to treat long-serving employees*. It will make life a struggle* for lots of staff."
Harrison said that negotiations between the union and the council* continue. "The council has told us it will no longer pay overtime – it wants to get rid of weekend enhancements and shift allowances. Many of the staff who thought they were going to be better off may, in fact, find the opposite is the case. The whole thing is a complete mess," she says.
A spokesman for the council laid the blame firmly at the door of the equality legislation. "We are carrying out this review because we have to, and our aim throughout has been to develop a pay structure* which ensures the different groups of staff we employ are paid and rewarded in line with the demands of the Equal Pay Act and nationally made agreements with trade unions.
"Throughout this process the welfare* of our staff has been a priority and we recently decided to produce a new grading model because the first one we had would have meant a lot more of our staff would lose money.
"We will be seeking to minimise the impact of the move, and offering staff help and counselling through this difficult period," says the spokesman.*
A spokesman for Unison's national office says councils have known about their equal pay responsibilities since 1997, and, as such, should not be using* the current economic climate as an excuse* to cut staff pay.
"The aim of the legislation was to bring those who were being discriminated against up to the same level of pay as their peers who do work of equal merit
"We estimate that 56% of councils have undertaken and implemented pay reviews in response. It has been very contentious – there are going to be more disputes to come.
"The union still has over 45,000 equal pay claims outstanding."
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