Dilemmas of Downsizing During the Great Recession: Crisis Strategies of European Employers

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,...

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Bibliographic Details
Published in:De Economist (Netherlands) 2013-09, Vol.161 (3), p.307-329
Main Authors: van Dalen, Hendrik P., Henkens, Kène
Format: Article
Language:English
Subjects:
Denmark
Downsizing
Early retirement
Economic conditions
Economic Policy
Economic statistics
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Employees
Employers
Employment
Great Recession
Hours of labor
Human resource management
Labor economics
Labor market
Layoffs
Management of crises
Microeconomics
Older workers
Poland
Public Finance
Recessions
Retirement
Studies
Surveys
Threats
Wages & salaries
Younger workers
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Summary: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.
ISSN:0013-063X
1572-9982
DOI:10.1007/s10645-013-9211-7