The new reality
Excel Recruitment conducted a survey to see how Irish store managers are coping with the new reality of reduced margins and restricted consumer spending.
17 February 2010
The Excel Recruitment Retail Management Survey was conducted during late December 2009 and January 2010, asking a sample of 250 store managers a range of questions regarding employment conditions and rates of pay. Some 80% of respondents were from the supermarket and convenience sectors, with the remainder representing the fashion and non-food retail sectors.
The new reality
Of those surveyed, 90% said that they had implemented wage cuts over the last year; 88% of managers also said that salaries needed to be reduced in line with the reductions in the cost of living to make Ireland competitive again, with the majority (92%) agreeing that wage cuts had to be made sooner rather than later. A recent Small Firms Association survey found that 13% of respondents cited labour costs as their single biggest threat and 87% as a major business problem.
As is the case in many other sectors where there are large numbers of foreign nationals employed, respondents to this survey reported a 22% decrease in the numbers employed. When asked why they were no longer employed, it was found that 38% had left voluntarily to return to their own countries. 22% had voluntarily changed jobs, 12% were made redundant, while 28% left for “other reasons.” Meanwhile, 78% of those surveyed reported no change in the numbers of foreign nationals employed.
It is estimated that 75,300 foreign nationals work in the wholesale and retail trade in Ireland. Excel’s managing director, Barry Whelan says he is not surprised by this finding, “as we all know the construction sector, where the majority of foreign nationals worked, was decimated. Once these guys decided to leave obviously their partners, many of whom worked in retail outlets, left too.”
Retailers have been getting their stores in order over the past year with many owner-managers returning to work fulltime in their stores, as well as allocating additional duties to existing staff. Not surprising then that 65% of managers do not think that their stores are over-staffed, while 25% believe that they are. In addition, 85% of managers have asked staff to take on additional duties in the interest of keeping costs down and protecting their jobs.
A recent statement backs up this finding, from Avine McAnally of the Small Firms Association, who states: “In the last 12 months many small companies have engaged in drastic cost-cutting measures in an effort to survive the economic down-turn. The outlook for job creation is particularly poor and we expect to see further erosion of jobs in 2010 as investment and business confidence remains weak, with no reduction in business costs and the international credit crunch still causing liquidity and cash flow issues for the small businesses sector.”
Salary increases off the cards
Not surprisingly in the current market, retail managers have not been knocking down the doors looking for salary increases, with 98% saying that they did not seek a salary increase over the last 12 months. While almost all the managers did not seek or get a wage increase, they claim that even in the midst of the current economic crisis 30% of staff have sought a pay rise.
Commenting on the overall findings, Whelan says: “Almost all stores nationwide have experienced a decline in sales, so it goes without saying that if sales are down 10% of costs have to be cut accordingly. Initially what we saw was pretty low-level adjustments and where there was natural attrition, like the departure of foreign nationals, they were not replaced.
“However, as the recession deepened other factors were looked at, such as last in, first out reduction in hours, and wage cuts. One thing that was extremely heartening was the attitude of the managers. Almost without exception they all had a great ‘can do’ attitude. And instead of moaning about their losses were realistic about what had to be done. They knew that personally they had to do more for less money and they had to get their staff to do the same.”
According to Whelan, many of the respondents were critical of the minimum wage and said that it severely constrained them in making adjustments for the sake of the businesses they manage. What’s more, they were having to take reductions in their own pay at the same time.
“While 90% of managers said they had had to take a wage reduction, managers of stores in the border area were the worst hit when it came to salary cuts. Managers in border stores were taking cuts of more than 30%, going from salaries of €35,000 to €22,000 in some cases. And there was nothing they could do about it. The stores sales were decimated by cross border shoppers and the managers’ salaries were cut accordingly.”
Whelan adds, however: “We did see a small amount of opportunism by some employers, where in a small number of cases store sales were up but managers were either expected to take a decrease or not get any pay increase.”
Looking to the future
According to Whelan, consumers will be far better served in stores in the future. “I think consumers can look forward to a much higher level of service. Staff now realise that there is no more ‘easy street’ and are therefore willing to work harder to protect the job they have. Staff working in retail outlets are now more realistic and more flexible in terms of hours and job descriptions.
“However, there is one worrying trend that we have seen with some major retailers. What they did last year was cut back so drastically on staff that in some of their stores it is almost impossible to find something to buy (stock availability issues) and service is non-existent. If they don’t address these issues their businesses will suffer irreparable damage. It’s always been said that working in retail is a vocation rather than just a job, but I am glad to say that Irish managers are stepping up to the plate and putting the customer where they belong – first.”
So are more job losses and more salary reductions inevitable? According to the SFA, unless Government takes decisive action in cutting the costs that are directly within its control, then the answer is yes.
“Whilst small Irish businesses have taken a series of actions to regain cost-competitiveness within their own businesses, including negotiating real pay decreases with staff, many costs remain which are outside their control as they are government-controlled. In the absence of reductions in these costs, small businesses will continue to have to further reduce the costs that are within their control, and this will inevitably mean a further loss of jobs,” says Patricia Callan, director, Small Firms Association.
It’s a new dawn for retail staff, according to the latest industry survey by Excel Recruitment, but managers remain positive despite widespread cuts
90% of staff get wage cut
85% of staff take on extra duties
98% of managers see no pay increase
22% less foreign nationals employed
Excel Recruitment Retail Management Survey 2010
What was the percentage increase/decrease in the number of foreign nationals employed in your organisation?
22% of respondents said that their stores now employed less foreign nationals
38% of that number left voluntarily to return to their own countries
22% changed jobs voluntarily
12% were made redundant
28% left for “other reasons”
78% of managers noted no change in the number of foreign nationals employed
Do you agree that salaries need to be reduced?
If wage cuts are needed, do you favour a soft landing or the sooner the better?
92% sooner the better
8% soft landing
What percentage salary cuts have you introduced or been introduced to?
10% no pay cut
40% 5% pay cut
28% 10% pay cut
17% 20% pay cut
5% 30%+ pay cut
Is your store overstaffed?
Have your expectations of staff performance increased in the last 12 months?
Have you seen improvements in the quality of work by staff in the last 12 months?
Have you asked staff to take on extra duties over the last 12 months?
Have you asked for a salary increase in the last 12 months?
Have you been asked for a salary increase in the last 12 months?