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Pay cut or redundancy?

Discussion in 'Alley of Dangerous Angles' started by Silvery, Nov 11, 2009.

  1. Blades of Vanatar

    Blades of Vanatar Vanatar will rise again Adored Veteran Pillars of Eternity SP Immortalizer (for helping immortalize Sorcerer's Place in the game!)

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    Any employer that hires you into a low paying job, knowing full well your work history, doesn't need to think long and hard to realize that you will be trying to get back to where you were. Obviously, all of that should be cleared up at the initial interview, but most managers understand this, as many were in those same shoes when they were younger. Otherwise, they probably would of gave you the "Sorry, but you're overqualified" line.

    Our Manager at the post office new my story and encouraged me to get other work, though she hated losing me knowing I was willing to earn my dollars with hard work, as opposed to the many long-term, fulltime, union workers they normally employ. She knew they weren't looking to hire any temps into a full-time position, as did the full-time employees, so to react in any other way would of made her look the fool.
     
  2. Splunge

    Splunge Bhaal’s financial advisor Adored Veteran Pillars of Eternity SP Immortalizer (for helping immortalize Sorcerer's Place in the game!) Torment: Tides of Numenera SP Immortalizer (for helping immortalize Sorcerer's Place in the game!)

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    Absolutely agreed. I mentioned that jobs with high turnover or those which don’t require a lot of training should be exempt from long-term expectations, and although I didn’t say so, low-paying jobs typically fall into at least one of those categories. The only exception would be a scenario where someone intentionally misled an employer into think that they weren’t going to be looking for another job (although generally the employer would have to be pretty naïve to believe that an obviously over-qualified person would be willing to settle for something substantially less); this, however, clearly doesn’t apply to you.
     
  3. Déise

    Déise Both happy and miserable, without the happy part!

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    At the moment McDonalds and department stores are being swamped with hundreds of applications when they advertise a handful of positions. No manager in their right mind is going to hire somebody who'd run off next week given half a chance. Nor are they going to want to accomodate people for job interviews elsewhere.
     
  4. Morgoroth

    Morgoroth Just because I happen to have tentacles, it doesn'

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    It's almost painful to see how some with real disabilities have extremely difficult to get into disability retirement but then others who have perhaps at a time had a disability can hang on to their benefits indefinently because no one simply bothers to check it out. Too bad for the former and the latter that the government is likely to heavily revise disability retirmenet qualifications when the population gets older and the work pool needs to be expanded.

    EDIT: To add something to the actual topic at hand.

    The choice between redundancy and pay cuts are usually easy to make but labour unions that contest this usually claim that the financial situation of the company does not require these cuts, sometimes their claims are actually correct, companies may be falsely intimidating and threatening with redundancies.

    Personally I think pay cuts are provocative and likely to end with labour struggles which really won't benefit the company very much and instead the company should primarily strive to reducing working hours when full capacity can't be used, that would be easier to push through the unions and would probably be better accepted among the workers. It's a bit sad that this option is not used more than it is today.
     
    Last edited: Nov 14, 2009
  5. chevalier

    chevalier Knight of Everfull Chalice ★ SPS Account Holder Veteran

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    I'd take a cut to help people keep jobs or to help save the company, but not to help keep someone higher's benefits intact. In reality, the management probably gets a jab in the ribs when it comes to profit shares, perks of the position, having assistants etc. and gets a higher overall percentage reduction than their workers, but it doesn't always have to be so. The cut should be at least proportionally equal (everyone up to top management losing the same percentage of pay, with the owners or even shareholders preferably also taking a smaller profit) - or people with higher income should take higher percentage cuts (though not by very far), or there should be a system to ensure that workmen's wages get a higher priority than passive incomes, fringe benefits and other benefits that are perks of a high position rather than pay for work in the strict sense.

    Also, in some situations, I'd prefer to take a direct pay cut than to lose a benefit I wouldn't be able to obtain on my own - at all or for the money it costs the company.

    What else? In some situations, less money to share comes from less business. Less business means less time working. Less time working means it might be possible to reduce work hours along with pay.

    And now I'll be venturing where few people would think to go, but a company still gets better prices per unit on a stock purchase and/or sometimes it has access to better deals on some products or services, so there might be some way to mitigate the consequences of a pay cut.
     
  6. T2Bruno

    T2Bruno The only source of knowledge is experience Distinguished Member ★ SPS Account Holder Adored Veteran New Server Contributor [2012] (for helping Sorcerer's Place lease a new, more powerful server!) Torment: Tides of Numenera SP Immortalizer (for helping immortalize Sorcerer's Place in the game!)

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    I'd have to disagree with that Chev -- good to see you posting again here -- I think the amount of cuts should be quite disproportionate. When a company is not doing well it is the decision makers at the top who should pay the lion's share.
     
  7. Morgoroth

    Morgoroth Just because I happen to have tentacles, it doesn'

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    Corporate cultures of course vary from country to country but this certainly NOT true in Finland. If we are talking about most major corporations the CEO's and upper management make most of their income from various bonuses and option programs offered by the company. They are usually bound to their performance, but since they are usually decided by the share value a CEO might be netting huge bonuses when ordinary workers are getting the boot because of short term adjustments. When production capacity is reduced management remains in most cases unaffected, unless they are themselves kicked out due to bad performance in which case they are likely to recieve a hefty golden handshake to take along.

    The fact that bonuses are bound to the share value makes the management quite unwilling to push the burden of harder economic times on the shareholders, since the value of the share is determined by the expected return. In reality the easiest way for management to cut costs is to push it down on the workers, and without proper unionization it obviously becomes even more easier. Getting workers to accept pay cuts is a win-win situation for management, heck they might even agree themselves to take similar cuts since their bonus programs are likely to more than compensate the reduction in their actual sallary.

    I also agree with T2, the people with the highest responsibility should bear a higher proportional burden of the failures. Unfortunately that is not the case in reality, in fact it's quite the opposite in my expirience.

    EDIT:

    This rant is a bit offtopic but it's something I really wanted to point out. In my opinion there's something seriously wrong with corporate governance these days and it's mostly about the overwhelming importance of share value in today's world. Now there's nothing bad with individuals investing money in companies believe in but that's just a free market pipedream, something I'd like but it ain't reality. In reality the biggest investors are hedgefunds and banks and most people invest money in them more than they invest directly in shares.

    Banks and hedgefunds invest with the sole purpose of getting the highest rate of return for their stocks, they don't care about ANYTHING else and why should they? If they'd make value decisions based on social responsibility or ecofriendliness they'd be losing money and the people investing in their respective funds (who usually don't have any idea in which stocks the banks and hedgefunds have put their precious savings) would pull their money and stick it to a more competetive hedgefund or bank. The competition between financial institutions forces them to stick to the sole principle of profit, usually the short term kind which is particullary dangerous.

    Now, with an individual it's all a bit different. If an individual sees that a corporation he has shares in is giving close familymembers or friends the boot, or poisoning the lake he likes to fish on, he might get a bit pissed and sell his shares. If that individual has invested indirectly through say, a bank then he's unlikely to know about any of this and can't therefore affect decisionmaking within the corporation or its market value.

    I guess what I'm trying to say is that I'd like companies to reflect more the real feelings of the actual owners (direct or indirect). Most people care about other things than making money (atleast hopefully) and it would be great if the market sometimes actually managed to reflect these feelings and with the overwhelming amount of indirect ownership that just does not seem possible without government regulation, which in all fairness is not allways the ideal option.
     
    Last edited: Nov 14, 2009
    Chandos the Red likes this.
  8. Carcaroth

    Carcaroth I call on the priests, saints and dancin' girls ★ SPS Account Holder

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    Being in the construction industry, we've been hit pretty hard.
    Already taken 10% paycut, another 10% on the cards depending on whether some of the job prospects take off in the new year.
    Total staff has already decreased by about 60% through redundancy from ~100 to ~40 (though nobody has been let go with a 3-month or more notice period). With the current make-up (Necesary support staff, and the upper echelons) That leaves only 4 of us still likely to get the chop if things get any worse. (Reasonably high pay, short notice period)


    UK (State paid) redundancy works on:

    0.5 week's pay for each full year of service where age during year less than 22
    1.0 week's pay for each full year of service where age during year is 22 or above, but less than 41
    1.5 weeks' pay for each full year of service where age during year is 41+

    Assuming you have more than 2-years full employment (otherwise you get nothing), and up to a maximum of £380 per week.
     
  9. Blades of Vanatar

    Blades of Vanatar Vanatar will rise again Adored Veteran Pillars of Eternity SP Immortalizer (for helping immortalize Sorcerer's Place in the game!)

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    Well, my company just pulled any additional funding for our 401K. Just our own contributions. A super bummer. As I now have one year in and will start to qualify for it in January, the timing couldn't be more crummier! Oh well, IRAs and Roths it is.
     
  10. Cap'n CJ

    Cap'n CJ Arrr! Veteran

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    This isn't even a choice, in my opinion.

    You can have some money, or no money atall.
     
  11. Blackthorne TA

    Blackthorne TA Master in his Own Mind Staff Member ★ SPS Account Holder Adored Veteran Pillars of Eternity SP Immortalizer (for helping immortalize Sorcerer's Place in the game!) New Server Contributor [2012] (for helping Sorcerer's Place lease a new, more powerful server!) Torment: Tides of Numenera SP Immortalizer (for helping immortalize Sorcerer's Place in the game!)

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    Wait. Does this mean you are not going to contribute to your 401k when eligible and instead use IRAs only? That could be a big mistake. You do realize that all your 401k contributions are before-tax dollars? That means for every dollar you contribute, that's one less dollar applying to your gross income for which taxes are calculated. Also, the before-tax contribution limit is much higher ($16,500 this year) than the contribution limit for IRAs.

    Sure it sucks you're not getting the free money, but that doesn't mean the 401k is not good for you.
     
  12. Aldeth the Foppish Idiot

    Aldeth the Foppish Idiot Armed with My Mallet O' Thinking Veteran

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    I tend to agree with BTA. IRAs are after-tax money, 401k is before tax money. Sure, IRAs don't have the stiff penalties that 401k has if you withdraw the money early, but so long as you are reasonably sure you won't have to do that, the 401k is probably your better option.

    Right now, for tax purposes, the money you put in the 401k is just like the money you pay into your company's health care plan - it's like money you never earned come tax time.
     
  13. Blades of Vanatar

    Blades of Vanatar Vanatar will rise again Adored Veteran Pillars of Eternity SP Immortalizer (for helping immortalize Sorcerer's Place in the game!)

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    I will still diversify 5% of my pay into my 401K. I planned to do more, but since they just cut the match and with the current economic "inconsistancies" around the world, I would rather not risk all of my retirement in funds that can possibly go south. I prefer to have some stability in my retirement funding. So, I now have 5% of my pay aside for the IRAs/Roths and 5% for the 401K. I am aware of the pre-tax conditions on the money. I take advantage of several pre-tax dollar options offered through my wife's company as it is, like Independant care options for my kids(we max that out up to $5200.00) and Healthcare as well, since we just had a baby and doctors' visits galore. Last year I also took advantage of their litigators for 7 dollars a month and used them for the will & trust setup for my kids. Talk about a bargain!
     
    Last edited: Dec 14, 2009
  14. Aldeth the Foppish Idiot

    Aldeth the Foppish Idiot Armed with My Mallet O' Thinking Veteran

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    If you are worried about the market, make sure you put some of your 401k into bonds. Actually, even if you aren't worried about the market, it's wise to not go all stocks with your 401k.
     
  15. Blades of Vanatar

    Blades of Vanatar Vanatar will rise again Adored Veteran Pillars of Eternity SP Immortalizer (for helping immortalize Sorcerer's Place in the game!)

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    I plan to put a percentage in some Global funds as the dollar is currently week and a Value Fund(companies currently struggling but projected to regain as the economy regains), but I will also dump a nice chunk into a balanced fund class. The balance, around 40%, will be applied in bonds. I am fortunate enough to have a brother in the finance business. His knowledge is very helpful concerning the subject.
     
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