Shops foot £28m redundancies bill

The true cost of recession for Britain's biggest agencies has emerged with new figures revealing that each of them has paid out more than pounds l million in redundancy payments over a two-year period.

During that time, agencies made an average of 35 redundancies, representing 6 per cent of their workforces.

The average cost of each job loss was £30,000, bringing the total redundancy bill for the UK's largest shops to more than £28 million.

The redundancy settlements have come during a period of relentless decline in adspends. Latest figures from the Advertising Association show third-quarter spending to have dropped 2.6 per cent in real terms compared with a year ago.

The statistics appear in a report leaked to Campaign. It was produced for the IPA and circulated only among the chief executives of the country's top 20-ranked agencies.

It is understood that the IPA chiefs were reluctant to give the report wide publicity. They feared a barrage of criticism over its warning that inflexible working methods within advertising mean it lags far behind the rest of British industry.

Hamish Pringle, the IPA's director-general, said: "This report should act as a wake-up call for the major agency groups. It's an issue that needs to be addressed because there appears to be a lot of waste."

The report, prepared by Niall Hadden, the WCRS director of human resources, highlights what he claims is an alarming difference between the numbers of agency staff employed on a non-permanent basis compared with the rest of industry.

Just 7.5 per cent of agency staff are employed under non-standard working arrangements, far less than the national figure of 44 per cent. More than 90 per cent of staff are on permanent contracts.

"These figures are truly dismaying," an IPA source said. "Agencies that are supposed to be flexible and creative don't seem to be showing much of either when it comes to hiring."

But Rupert Howell, the McCann-Erickson president for Europe, the Middle East and Africa and a former IPA president, claimed agencies shouldn't be criticised for being as generous as possible to axed staff, or for meeting client demands.

"We'd love to be able to juggle our resources to match demand but we're in a client service business and clients demand service 24 hours a day and seven days a week," he said.

"There are some really good freelance people available now, particularly creatives and planners, and the situation is changing. But very slowly."

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