Regretting redundancy

Wednesday, July 24, 1996

By Frank Barbaro

A South Australian study of voluntary redundancies warns about its damaging impact and calls for further research into its hidden costs. More than 30% of redundant workers who take separation packages regret it. Even those who said they had no regrets, on further questioning responded negatively, which suggests they are uncertain about their decision.

Only 9.3% of respondents were working full time after taking a package, and 53% said they were facing financial difficulties. The study concludes that voluntary redundancies are just another form of retrenchment that lead to unemployment and social and economic insecurity.

In what is believed to be the first study of feelings and fortunes of redundant workers, Carol Coombs, from the University of SA, calls for more research into the phenomenon.

Her study of the implications of voluntary redundancy (targeted separation packages) concludes that they are neither voluntary nor rewarding. "Workers have little choice once they have been targeted for voluntary redundancy, other than to accept it", Coombs says.

Half of the respondents in the study were not given alternatives to redundancy. Any alternatives offered meant less money or less status. Fear of retrenchment, overwork and stress encourage workers to take a package, Coombs states.

Coombs says there is an initial honeymoon period in which workers pay off the mortgage or car, but then reality bites. She says it appears that older workers are being targeted for redundancy and that they add to the growing number of unemployed older workers.

"Workers are being forced into early retirement at an alarming rate, without any public debate or research into its consequences. There is an urgent need for analysis and policy development in the area."

Coombs says that at the moment policies are working against each other. "We have extended the retiring age for women, making access to unemployment benefits more difficult, while work opportunities for older people are falling and their life span is increasing."

She says that until redundancies are documented and studied, their associated problems will stay hidden. "The lack of information is disturbing given work force downsizing from restructuring since the late 1980s. The number of affected workers will increase with the implementation of the Hilmer Report and privatisation of more government functions." Current data and research focus on unemployment, retrenchment and retirement and do not recognise voluntary redundancies.

According to the study, mature age redundant workers face unemployment or early retirement. "For most it means many years on insufficient income", Coombs says. "Society will more likely end up with a large number of older workers on social benefits."

She says the study leaves no doubt that redundancy is detrimental to workers, their families and society. Common negative themes in the responses are loss of income, low self-esteem, no job security, loss of control over prospects and marriage strain.

Eight-three per cent of those surveyed were men, and a high percentage of those are supported by working spouses. Coombs says this is a source of tension because it conflicts with conventional roles for men and women, particularly among older workers.

A key recommendation from her study of 107 written responses is further research on the long-term implications of separation packages on workers. She also suggests that workers be made aware of the social implications, and be offered counselling before taking a separation package.

The offer you can't refuse.

Whose soft option?

[Frank Barbaro is a journalist and assistant secretary of the South Australian Media, Entertainment and Arts Alliance.]