Strategies and Options
MENU OF OPTIONS
This section presents a typology of labor adjustment (or work force structuring) options. There are many ways to restructure the work force. This section first reviews the different options and then outlines how they might be used in combination as part of a comprehensive labor program.
Early retirement, voluntary departure, and compulsory redundancy are the most commonly used options for labor adjustment. There is, however, a wide range of options that can be used by the implementing agency. The options are not mutually exclusive; in practice the options can be used in sequence or combined with one another.
Broadly, the options can be divided into three groups, as shown in figure 4.1:
- So-called soft options, which do not introduce new elements of incentive or compulsion, but rely on existing and therefore noncontroversial workplace regulations.
- Options that involve restructuring of the workplace. Some will be voluntary whereas others, such as closure of noncore units, may be seen by workers as involuntary change, especially if there has been little consultation.
- Retirement and redundancy through voluntary departure options or compulsory means. Voluntary options provide incentives for people to leave, either through early retirement or severance packages. Acceptance is not forced (although in cases where a worker's future prospects are very poor, workers may feel that they have had little choice). Compulsory redundancy options force workers to leave without asking for their consent.
Three groups of options:
- Soft options
- Workplace restructuring
- Retirement and redundancy.
Although not strictly a labor-restructuring tool, employee share ownership (see module 5) is a mechanism that may be used in conjunction with labor restructuring. It can be used in three ways:
- As an incentive or reward package for workers, particularly those who will remain in the work force.
- As the basis for management employee buyouts or employee buyouts of units of the enterprise.
- As a form of compensation to displaced workers whereby they receive shares instead of cash. As part of a compensation package, however, share transfers are probably best viewed as a supplement to, rather than a substitute for, severance or early retirement.
