27 Apr Nearly half of UK businesses considering redundancies in 2023 according to new research
Nearly half (43%) of UK businesses have recently completed or plan to make layoffs and redundancies in 2023, according to new research from LHH, the world’s leading talent development and career solutions company.
A further 29% of UK businesses admitted that they are unsure at this point if they will be making redundancies, and 18% said while they have no plans to layoff staff, they are on a hiring freeze. Just 8% of UK businesses confirmed that they will definitely not make any redundancies this year and are not on a hiring freeze.
The research was conducted for LHH via an independent survey by Censuswide of over 2,500 HR Directors at companies with over 500 employees, across the UK, USA, France, Canada and Australia. 500 HR Directors from the UK were surveyed.
Almost half (47%) of UK companies considering redundancies this year said that more than a fifth of their workforce could be subject to layoffs. 14% even revealed plans to let over 30% of their workforce go, and 34% said they have plans to layoff between 11-20% of their workforce.
The research follows workforce disruption in sectors such as technology, where some of the industry’s largest players have collectively laid off over 150,000 workers in response to slow economic growth and a need to cut costs.
Clearly, however, this is a trend that is impacting more than one sector, with respondents working for firms in Finance, Retail, Healthcare and more indicating that redundancies are being seriously considered.
LHH’s research revealed that the primary reason for layoffs in the UK in 2023 will be due to ‘cost-cutting imperatives’ – which 44% of respondents admitted to. Furthermore, 43% cited ‘over-hiring in previous years’ as a reason for layoffs, 38% said it’s due to a merger or acquisition causing duplication in various roles or positions, and 37% blamed poor business performance.
Just 12% of UK based HR Directors said their reason for potential layoffs was due to uncertainty in the economy, whereas 36% said it was because they were undergoing a restructure or reorganisation. Similarly, 15% said they may releasing employees who don’t have the right skillsets, and 7% said they would let go of individuals for low performance.
Are businesses doing enough to support impacted staff?
Despite the revelation around the extent of redundancies and layoffs, 35% of UK businesses said that they are not planning on adding any new support programmes for employees who are let go, and 11% are unsure.
Likewise, 30% said they are not considering delaying layoffs and redeploying people into open jobs, and 43% said they have considered this, but don’t have the resources to implement a deployment programme.
However, when asked about what programmes companies currently provide for those facing redundancy, a third (35%) of respondents said they currently provide outplacement vendor support. A further 49% don’t currently provide this, but said it is being considered. A similar number (35%) also provide access to an entrepreneurship programme as a career transition initiative, and 47% are considering implementing this.
Additionally, 52% said they offer opportunities to find a new role inside the organisation, 38% said compensation above statutory severance pay, and 46% said mental health support.
JC Townend, President of the Adecco Group and CEO at LHH Career Transition & Mobility for UK & Ireland commented:
“After a year of some of the lowest levels of redundancy on record in 2022, we are now seeing a major resurgence in restructuring and redundancies. Last year’s labour shortages meant companies were reluctant to cut staff. However, even though those shortages remain, there is a pent-up need for restructuring and cost-cutting in challenged business areas, which is now happening. And in some cases, like the digital sector, we are suddenly seeing a big market correction after many years of unrestrained staff growth.
“Even though the labour market is buoyant, the large surge in redundancies means it is especially important that business decision-makers support staff who are facing redundancy with support. This is not only the right thing to do, but it also has very real impact on the morale of remaining staff and on companies’ longer-term reputations.
“This might include traditional career transition support, which helps employees find the best new careers for them. This can turn a negative event like a redundancy into a positive life change in the long run. Other support could include establishing redeployment or retraining programmes to help relocate employees within the company. And for those staying, it is an important time to reevaluate compensation packages and career support to help ensure retention and engagement of your best employees.
