Now the Blue Chips start to feel heat
Vodafone wants to cut its operating costs by £1 billion
Published Date: 12 November 2008
BRITAIN is bracing itself for thousands of job losses, as major household names announced a wave of redundancies yesterday. Firms such as Virgin Media and Yell revealed the cuts ahead of today's official jobless figures, which are expected to show the highest level of unemployment for a decade.
In total, about 5,000 job losses were revealed yesterday, in sectors ranging from manufacturing to media, as the economic downturn continues.
Virgin Media is to axe 2,200 jobs across the UK by 2012, while the drugs giant GlaxoSmithKline said it was to close a manufacturing plant in Kent, with the loss of 613 jobs, by 2013.
Jobs are being lost at an average rate of 1,000 a day, according to Brendan Barber, the TUC general-secretary, who said the latest spate of redundancies was shocking "but no longer exceptional".
He went on: "More than 5,000 job losses in a day is a shocking statistic that brings home just how seriously the recession is hitting families across the country. But we should never treat these as just statistics.
"Each will be a very human story and, as it gets harder and harder to find new jobs, many will now be facing a huge cut in their weekly income, with benefits so low."
The UK economy is often about a year behind trends in the United States, where nearly a quarter of a million Americans lost their jobs last month.
Unemployment in the United States has soared by 1.2 million over the past year to reach a 14-year high of over ten million, more than half the redundancies in the past three months.
Further lay-offs in Britain will be inevitable after Christmas, due to the expected retail slowdown, economists have warned.
Adding to the gloom, 3.7 per cent was wiped off the value of Britain's leading shares yesterday.
Andy Kerr, deputy general-secretary of the Communication Workers Union, was dismayed by the Virgin Media job losses. He said: "This announcement has come as a complete shock. We have not been advised by the company about these job losses.
"We are extremely disappointed at the way Virgin Media has made this surprise announcement, which will be very damaging for staff morale."
A Virgin Media spokesman insisted that the job losses were not linked to the turbulence currently rocking international economies. Instead, he insisted they were the result of a review of the company's business following its creation through the mergers of several cable operators and Virgin Mobile.
It was "too early to say" where the cuts would take place, he said, adding that the company had not yet made any decision as to whether it would close any of its offices in Britain.
Virgin Media joins a roll call of companies scaling back their operations, including the Yellow Pages firm Yell, which warned it could lose a further 1,300 jobs in the next year.
In a plunging property market, the housebuilder Taylor Wimpey has seen its sales slump by 27 per cent and it is expected to cut a further 1,000 jobs.
Psion, the firm best known for its handheld computers, announced more than 200 job cuts after a profit warning.
And Vodafone has revealed it wants to cut £1 billion from its operating costs, fuelling speculation of job losses. Its worldwide workforce of 70,000 includes 10,500 UK staff, with 200 employed in Scotland. The firm refused to comment on job cuts but said it needed to radically reduce its cost base "to offset the pressures from cost inflation and the competitive environment".
The firm said it expected "challenging" conditions to continue in Europe for the foreseeable future as economic conditions worsened.
For example, Telekom Austria said on Monday that it would cut 1,250 jobs in 2009.
Equally worrying has been the news from General Motors in the past week that it is near bankruptcy. Analysts fear worldwide job losses of up to 2.5 million if the car giant folds.
The Starbucks coffee empire has also announced a slump in profits.
In the past week, Jaguar Land Rover announced 600 job losses, and Carlsberg said it was to close its 186-year-old brewery in Leeds, with the loss of 170 jobs.
Gordon Brown called yesterday for worldwide tax cuts and increased spending.
The Prime Minister, who has hinted strongly that the UK government will cut taxes, said: "If we have a fiscal stimulus in Britain and it is not repeated in other countries, it will have far less effect than if it were done in every other major economy."
The fallout will leave many small and medium-sized businesses facing ruin, and the British Chambers of Commerce are calling for government action to make banks extend credit.
One small business with an uncertain fate is Diamond Envelopes, an Aberdeen-based firm that employs 50.
The company has a deal with a French firm to make House of Commons envelopes, but the contract is being terminated. Malcolm Bruce, the Liberal Democrat MP whose constituency includes the factory, said the French firm had warned it was likely to shift production to the continent next year.
"It will be embarrassing for British MPs to be sending out letters in envelopes manufactured outside the UK, so I will be contacting the House of Commons authorities to see whether they will wish to explore the potential for a future supply from a UK manufacturer," Mr Bruce said.
Virgin Media is to axe 2,200 jobs across the UK by 2012, while the drugs giant GlaxoSmithKline said it was to close a manufacturing plant in Kent, with the loss of 613 jobs, by 2013.
Jobs are being lost at an average rate of 1,000 a day, according to Brendan Barber, the TUC general-secretary, who said the latest spate of redundancies was shocking "but no longer exceptional".
He went on: "More than 5,000 job losses in a day is a shocking statistic that brings home just how seriously the recession is hitting families across the country. But we should never treat these as just statistics.
"Each will be a very human story and, as it gets harder and harder to find new jobs, many will now be facing a huge cut in their weekly income, with benefits so low."
The UK economy is often about a year behind trends in the United States, where nearly a quarter of a million Americans lost their jobs last month.
Unemployment in the United States has soared by 1.2 million over the past year to reach a 14-year high of over ten million, more than half the redundancies in the past three months.
Further lay-offs in Britain will be inevitable after Christmas, due to the expected retail slowdown, economists have warned.
Adding to the gloom, 3.7 per cent was wiped off the value of Britain's leading shares yesterday.
Andy Kerr, deputy general-secretary of the Communication Workers Union, was dismayed by the Virgin Media job losses. He said: "This announcement has come as a complete shock. We have not been advised by the company about these job losses.
"We are extremely disappointed at the way Virgin Media has made this surprise announcement, which will be very damaging for staff morale."
A Virgin Media spokesman insisted that the job losses were not linked to the turbulence currently rocking international economies. Instead, he insisted they were the result of a review of the company's business following its creation through the mergers of several cable operators and Virgin Mobile.
It was "too early to say" where the cuts would take place, he said, adding that the company had not yet made any decision as to whether it would close any of its offices in Britain.
Virgin Media joins a roll call of companies scaling back their operations, including the Yellow Pages firm Yell, which warned it could lose a further 1,300 jobs in the next year.
In a plunging property market, the housebuilder Taylor Wimpey has seen its sales slump by 27 per cent and it is expected to cut a further 1,000 jobs.
Psion, the firm best known for its handheld computers, announced more than 200 job cuts after a profit warning.
And Vodafone has revealed it wants to cut £1 billion from its operating costs, fuelling speculation of job losses. Its worldwide workforce of 70,000 includes 10,500 UK staff, with 200 employed in Scotland. The firm refused to comment on job cuts but said it needed to radically reduce its cost base "to offset the pressures from cost inflation and the competitive environment".
The firm said it expected "challenging" conditions to continue in Europe for the foreseeable future as economic conditions worsened.
For example, Telekom Austria said on Monday that it would cut 1,250 jobs in 2009.
Equally worrying has been the news from General Motors in the past week that it is near bankruptcy. Analysts fear worldwide job losses of up to 2.5 million if the car giant folds.
The Starbucks coffee empire has also announced a slump in profits.
In the past week, Jaguar Land Rover announced 600 job losses, and Carlsberg said it was to close its 186-year-old brewery in Leeds, with the loss of 170 jobs.
Gordon Brown called yesterday for worldwide tax cuts and increased spending.
The Prime Minister, who has hinted strongly that the UK government will cut taxes, said: "If we have a fiscal stimulus in Britain and it is not repeated in other countries, it will have far less effect than if it were done in every other major economy."
The fallout will leave many small and medium-sized businesses facing ruin, and the British Chambers of Commerce are calling for government action to make banks extend credit.
One small business with an uncertain fate is Diamond Envelopes, an Aberdeen-based firm that employs 50.
The company has a deal with a French firm to make House of Commons envelopes, but the contract is being terminated. Malcolm Bruce, the Liberal Democrat MP whose constituency includes the factory, said the French firm had warned it was likely to shift production to the continent next year.
"It will be embarrassing for British MPs to be sending out letters in envelopes manufactured outside the UK, so I will be contacting the House of Commons authorities to see whether they will wish to explore the potential for a future supply from a UK manufacturer," Mr Bruce said.
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