Birmingham saw several large job cuts in 2008, and things are expected to get worse this year, with national unemployment figures set to reach two million.
And the Chartered Institute of Personnel and Development said there was a large body of psychological research evidence which suggests that redundancies can cause a decline in morale, motivation, engagement and performance amongst staff who keep their jobs.
It claimed the impact of redundancy may also show up in increased levels of employee stress and higher rates of sickness absence.
And it said so-called ‘survivor syndrome’ had a negative effect on workplace productivity and would increase the cost to employers of redundancy.
A reduction in employee engagement might also result in a higher rate of voluntary labour turnover. And it is possible that an organisation with a reputation for making people redundant may also find it harder to attract the most talented recruits.
The British Chambers of Commerce said it expected unemployment to peak at 3.1 million over the next two years as the recession bites, meaning that one in 10 of the British workforce would be facing redundancy.
In its January 2009 Economic Forecast, the organisation warned that the country faces a worse recession than the one experienced during the 1990s, with GDP expected to fall by 2.9 per cent between the third quarters of 2008 and 2009.
Between the same periods of 1992 and 1993, GDP declined by 2.5 per cent.
BCC director-general David Frost said 2009 was shaping up to be “one of the toughest years” ever for the UK and he urged the government to act on the “key problems” of falling confidence and constricted cash-flow.
“We must avoid losing viable companies during this downturn,” Mr Frost said.
According to the Office for National Statistics, unemployment increased by 137,000 in the third quarter of 2008 to hit 1.86 million.
