Pay cut or redundancy?

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As I was walking through town today there was a group of people protesting over a proposed pay cut for Superdrug employees.

Now, fair play to them, nobody wants to have thier wages cut. However, I was thinking that in the current financial climate, surely it would be better to take a drop in pay and suck it up rather than risk being made redundant?

I mean, these people are still going to get minimum wage at the very least but if they end up on the dole then they're going to be on £40 a week!

Am I the only person that thinks like this?

 

No you are not. Pretty soon you will have the usual suspects complain about how the rich get everything and that the corporations are mean and evil. It is all about envy and class warfare. When times are good employees expect everything, when times are bad, they also expect everything. I don't know of many companies that haven't had to lay people off. While no one wants to have to take a pay cut, it is better then having all of your pay cut.

 

I'd agree in general but I can't agree that it's always the right one. Some companies are still doing relatively ok but are using the recession as an excuse to cut costs anyway.In an old school type union vs management set up anything given up may take a long time to get back.

If a wage cut would bring you below the level you need to make your mortgage payments you might take your chances.

In many companies the people with the most power and who are most active in the union are not those who'd be left off if redundancies came in. This makes them more opposed to pay cuts then you would logically think if they were representing all their members.

I thought the dole in the UK was about £100, not £40? I wouldn't be too quick to dismiss the dole. There's a lot of non-money benefits too, particularly for families. You also avoid the costs of going to work. For many people they would be better off with no job than a low paying one.

 

This part of your post absolutly horrifies me. If this doesn't signify the downfall of a civilization I don't know what does. For the good of society we must start eliminating the dole and/or welfare. When people decide they are better off doing nothing and being supported by others, there is no possible way that it can end well.

 

Sarah Palin?

Seriously, I don't know how it works in the UK, but here people who collect unemployment have paid into the system, so they are not being supported by everyone else in the real sense. But it may be different in the UK.

 

It does depend on the dole system in your country. By reputation the US system is pretty severe but I don't know how true that is. My one is about double that of the UK (€204) though there's not as many free government services. It might seem weird coming from someone who's recently become redundant but I'd be strongly in favour of slashing it. It'd help get the economy moving which would be of much greater benefit to me.

One thing that realls irks me is that the system rewards irresponsible or illogical behaviour. There's a lot of bonus benefits available that only make much sense if you're going to be long term unemployed. Also, as someone who has no debt and a reasonable level of savings I can't qualify for anything beyond the basic dole. Fair enough in some ways, I don't 'need' it but it does annoy me that I'd have been better off blowing my money away instead of planning ahead.

Back to Silvery's point, it's also the case that in some instances the union heads might appreciate the situation but the grassroots are mad as hell at having to take pay cuts despite them doing nothing wrong. The demonstration might be a way to blow off steam. I've seen a few cases recently where I would suspect this was the case.

 

Funny how they freeze wages in the "current financial climate"... Still, not actually increasing wages and cutting them are two different things.

I'd suggest disgruntled employees in the UK seek employment at Barclays since banking seems to have recovered from the chill in the aforementioned climate.

Reading this thread gives me an urge to listen to the Sheffield Socialist Choir singing the Internationale:

This is the final struggle
Let us group together, and tomorrow
The Internationale
Will be the human race!​

Anyway, that's enough dirty commie talk for now.

 

Really? I didn't know Texas made you pay for your own unemployment insurance. The IRS taxes your employer and that is also what MA does. It doesn't cost the employee anything (directly).

 

I don't have a box on my pay stub that says "unemployment insurance", but if you're taxing the employer then that ultimately means the employer has less money to pay its employees. So while you may not be paying for it directly, you are paying for it.

As for taking a pay cut, yes, it sucks, but I know some companies are cutting salaries rather than lay people off. What would you prefer? Everyone taking a 5% paycut, or having 5% of the workers be laid off. Sure, that means that you have a 95% chance of not having to take a pay cut, but would you want to take the chance that you lose your job? Of course, I have no idea how severe the pay cut is. If it's a double-digit percentage, then perhaps the pay cut would result in you not being able to make your bills.

Things are very different in the UK, and other places in Europe if you can make as much not working and collecting unemployment as you can by working. I have only had to collect unemployment once in my life, and it was several years ago (I think it was 2000). The rules back then were you could only collect half of your pre-tax salary while you were working, but there was a cap on it. It's been a long time since I collected so the figures may well have changed, but around the year 2000, you got either half your salary or about $900 per month, whichever was less. The amount was more if you were married and/or had children, but neither applied to me at the time, so I don't know how much more you received. If you have a mortgage, it is highly unlikely that you can live better on $900 a month than what you were making. Heck, for a lot of people that wouldn't cover thier mortgage payment.

There was also a cap on how long you could collect - at the time I was on it, it was for a maximum of six months. I know that has been expanded out to a year in the current recession.

Because there is a limit on benefits, I don't really have a problem with paying out unemployment checks. Most people use the money to get them through times when they lost their job, and are looking for a new one.

I see far more abuses of the system when it comes to disability payments. Now, I don't have a problem with people who actually are disabled and cannot work, but all of the people I know who are on disability (and granted it's only a few) ALL of them are capable of returning to work, but are still collecting disability checks. Thats tantamount to stealing as far as I'm concerned.

There is a family that lives across the street from us that epitomizes the situation. The husband has been out of work since the spring and collecting unemployment benefits, and he openly admits that he's not trying all that hard to find a job. His wife is on permanent disability. Her condition certainly meritied disability at the time she started collecting over a year ago, but as far as I can tell, she is fully recovered at this point and living a normal life. They have two kids, and since both parents are out of work they receive a social security check for $700 per month for each child.

Both the husband and wife were blue-collar workers. They were probably both making in the $10-$15 per hour range. For them, if you combine the unemployment, disability, and SS checks for the kids, they probably ARE making as much by not working as they were by working. I'm pretty sure permanent disability pays you 3/4 of your salary, and since it's tax free, you basically are getting the same amount of money as were while working. The husband is getting half of what he used to get, but seeing as how they are getting $1400 total in SS money and he didn't have a high paying job, I'm pretty confident the SS money at least makes up the difference of what they were making when both of them were working.

That kind of abuse of the system DOES anger me. My wife talks to that family on occassion, because she's a stay at home mom, and well... they're home every day. The husband is not even TRYING to get a job. My wife asked him last week if his wife was planning on going back to work any time soon, and he said, "Not if she can help it."

I think the thing that bothers me the most is that they have kids, and this is the example they are setting for them.

 

If you rationalize it like that it makes sense but you have to wonder whether it will actually save jobs or if the cuts are only going to get deeper. If people accept pay cuts there is no reason why wages won't keep getting lower and lower given that the current situation offers reasons for doing so.

In France we pay a lot of taxes for welfare and the rest. I don't mind paying taxes because although some people abuse the system it is a good system. What angers me is when the tax money is being squandered (like spending 245,572 euros on a shower for our beloved president, it's even worse when we find out that it was never used).

Think about the billions that are being hoarded in tax havens. There is definitely something wrong in the way the capitalist system works. Unfortunately it's currently the only system that works.

These are quotes by Henry Ford and their simple logic would tend to demonstrate that if you cut wages then you will reduce the amount of money being spent and therefore reduce the profit that will be made thus resulting in a vicious circle.

Less money for wages means less profit for companies and ultimately even less money for wages...

 

Snook - Aldeth is right. It is a benefit of being employed full-time. While the employer actually pays it, it is considered part of a total compensation package, like health insurance or vacation time. The reason I say this is because a lot of people don't qualify for unemployment (like part-time workers).

 

I work on-site for a firm, at a plant of a rather large company. This large company has had layoffs this year, but recently, instead of laying off more of the workforce, they are enforcing furlough days, unpaid days off. This year there were 7. Next year they are adding ten more, making a total of 17 unpaid days, a 6.5 % pay cut. Ouch! This works great for me, as I'm paid by my company, a salary position, so I'm getting 17 free days off, paid! I'm not allowed in the building on these days. But many that I work with are really frustrated. I understand their discomfort, there are a few single mom's in my office and the pay cut is really hitting them hard. It's tough, but it is definitely better than losing your job completely.

 

Wow. In Canada, employees contribute 1.7% of their wages (to an annual maximum of $732), while employers contribute 2.4% (max $1,025). Basically, premiums are paid on earnings up to $42,300, and benefits are 55% of earnings (again, up to a max of 55% of $42,300).

Anyway, on topic, I agree with Silvery. I also agree that it's better to work than to collect benefits.

 

Figures discussed here seem completely alien for me, but hey, I live in Sweden - the country with one of the most generous policies for welfare.

Here you get 80% of your previous salary as your unemployment/sick pay (up to about the average pay across the whole country) and while it'll go down successively as time goes by, you'll never fall below 65% unless you start acting like a complete idiot and refuse going into job interviews offered to you.

There's been a massive outcry when the current government started tilting the scale back into supporting doing real, actual work instead of relying on welfare. While I have to agree that you don't magically get well (or even less lazy) if your welfare goes down, it's just way too easy to end up in realistic scenarios where opting for welfare instead of working gives better payoff is just plain old idiotic.

Having a job, even a low salary one, should ALWAYS provide for better private economy than going on welfare. Otherwise, what's the point of working? Apart from having something meaningfull to do with one's life and such secondary benefits of having a job, of course.

 

It's those who don't care about a better economy and are out only for themselves that hurt the rest of us. Those who rather live off welfare than get off of their lazy butts everyday and contribute to society. There are so many of these types nowdays, it's scary. The rest of us foot the bill for them and I don't see it stopping anytime soon.

 

I'd take a pay cut over redundancy. Every time.

 

That actually seems pretty reasonable. Most people with decent jobs have a lower chance of being laid off, and so caping it at $42,300 of earnings seems reasonable. Then again, 55% of $42,300 is just $23,265 - and you certainly aren't supporting a family on that.

I also think it's about equal in the US. While we don't pay the premium, out benefits are capped at 50% (also with a fairly low cap), and I imagine the 5% lower benefit would make up for a good chunk of that paid towards the annual premium.

As I mentioned in my previous post, I'm convinced that the only way to really pull this off and live a reasonably decent life is to have kids - the more the better - because if both parents are out of work you get a monthly benefit from Social Security of $700 per month per child. When you look at your set monthly costs like mortgage/rent, heat, water, electric, etc., are going to be relatively constant regardless of the number of kids, so I really think multiple children is the way to do this.

To use the people who live across the street from me, even though both parents were out of work, they went ON VACATION this summer! WTH? But I think a single person depending on welfare is not going to livng high off the hog.

Definitely - unless the pay cut is drastic you're definitely coming out ahead by continuing to work. Pay cuts definitely suck though.

 

I guess it depends on how easily you think you could find another job.

And on how much your redundancy package is worth. We have people who have been working with us for over 30 years. They'd LOVE to be made redundant because they'd get paid about 18 months worth of salary as a redundancy payout.

 

I agree, but I was assuming that there wouldn't be much of a package (not an unreasonalbe assumption under the circumstances described). And in Canada, severance pay delays the start of your benefits pay.