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I heard a story the other day, about a guy I know. He and I have crossed paths several times through the years, over golf and business and car shows and more business – you know the way it goes. This guy had been at IBM Canada for a long time – more than a couple of decades. He served loyally, and now, not too far from retirement, he’s been offered a package to leave. So far so good! I’ve seen lots of people very happy to be in this position. A decent severance package can be something you were hoping for, or jostle you out of your rut. It can make a nice bridge to retirement or to a mid-life career shift. So what’s making me Always Grumpy? The package they offered my friend sucks!

OK, so he’ll go to a lawyer, and the lawyer will write a letter. There are strong precedents for what comprises a good package in our industry, and more than likely IBM will cough up a more attractive package rather than go to court. That would be fine… but then yesterday I saw this article in one of my favourite tech news sites, The Register.

I’m unsurprised to see that IBM Canada is not alone in trying to reduce the cost of redundancy packages by offering only the legal minimum. Near the end of that article, IBM UK is reported to be doing the same. I predict this will be a growing trend, and not just at IBM. As we approach the big shift away from expensive full-time employment to cheaper BYO contract jobs for bid, employers must be figuring out that the cost of laying off their existing staff is going to be significant: you can bet our corporate leaders are trying very hard to find a way to keep that coin for themselves and their friends!

At least some of the newly-redundant employees will accept the smaller packages, which will set new precedents and reduce the average and typical package sizes, which in turn will make it harder to negotiate or litigate for the old, more generous severance packages. HR departments and senior executives of other employers and in other industries and jurisdictions will be watching carefully: if they see the slightest sign of success here they’ll jump on the bandwagon, if they aren’t already helping to lead the parade. If – no, when – the new standard penetrates the marketplace it will make lay-offs financially less burdensome, hence much more attractive for employers. This will accelerate the race to the bottom for non-executive compensation, as more newly-redundant workers with less generous severances compete for fewer remaining jobs.

I’m not sure this could be stopped, even if we had the will to legislate and/or unionize. Severance packages will meet minimum legal standards, and there will be pressure from the corporations to soften the legislation in order to protect corporate profits. After severance, for the lucky ones with skills to sell, contract jobs for bid are the likely way of the future, to corporations who accept no responsibility for the people who work for them, at lower rates of pay than before and with little or no safety net in the way of benefits or pension. And you’d better plan to bring your own skills, equipment, work space and connectivity to the table. More people competing for less work, remember?

In the meanwhile, I think we can assume that executive compensation will continue to climb much faster than inflation. If that stops, call me Very Surprised!

TL/DR: Even those of us who are well and fully employed should count on the pace of lay-offs to gradually increase and the sizes of wages, benefits, pensions and redundancy packages to decrease over the next few years until they closely approach the statutory minimums in their various jurisdictions. If you don’t have current and salable skills, you should start thinking about which minimum-wage jobs you hope to compete for, and how you’ll adapt your lifestyle to less than a living wage. If you’re lucky, you’ll have enough money for internet service that you can use to watch the lives of the rich and famous from afar.

Your thoughts? Go ahead and comment!

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