Dilemmas of downsizing during the Great Recession

Crisis strategies of European employers

H.P. van Dalen, C.J.I.M. Henkens

Research output: Contribution to journalArticleScientificpeer-review

Abstract

The present paper analyzes the choices faced by European employers when threatened with the prospect of the mass lay-off of their employees as a result of the Great Recession. By means of a representative survey among employers in Italy, Germany, Denmark, Poland, the Netherlands and Sweden in 2009, we show that employers mainly prefer to tackle such threats by offering short-time work, and by early retirement packages to older workers, in conjunction with buy-outs. The latter preference is particularly visible in countries where employers perceive the level of employment protection to be high. The only notable exception is Denmark, where employers prefer to reduce working hours. In general, a sense of generational fairness influences downsizing preferences, with those employers who favor younger workers particularly likely to use early retirement and buy-outs when downsizing, followed by working time reductions. Wage reductions and administrative dismissal are less favored by European employers. In particular, CEOs and owners are more inclined than lower-level managers to cut wages.
Original languageEnglish
Pages (from-to)307-329
JournalDe Economist
Volume161
Issue number3
DOIs
Publication statusPublished - 2013

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Great Recession
Downsizing
Employers
Early retirement
Buy-outs
Wages
Denmark
Italy
Poland
Chief executive officer
Managers
Sweden
Germany
Employees
Fairness
Threat
Working time
Young workers
Owners
Older workers

Cite this

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title = "Dilemmas of downsizing during the Great Recession: Crisis strategies of European employers",
abstract = "The present paper analyzes the choices faced by European employers when threatened with the prospect of the mass lay-off of their employees as a result of the Great Recession. By means of a representative survey among employers in Italy, Germany, Denmark, Poland, the Netherlands and Sweden in 2009, we show that employers mainly prefer to tackle such threats by offering short-time work, and by early retirement packages to older workers, in conjunction with buy-outs. The latter preference is particularly visible in countries where employers perceive the level of employment protection to be high. The only notable exception is Denmark, where employers prefer to reduce working hours. In general, a sense of generational fairness influences downsizing preferences, with those employers who favor younger workers particularly likely to use early retirement and buy-outs when downsizing, followed by working time reductions. Wage reductions and administrative dismissal are less favored by European employers. In particular, CEOs and owners are more inclined than lower-level managers to cut wages.",
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Dilemmas of downsizing during the Great Recession : Crisis strategies of European employers. / van Dalen, H.P.; Henkens, C.J.I.M.

In: De Economist, Vol. 161, No. 3, 2013, p. 307-329.

Research output: Contribution to journalArticleScientificpeer-review

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