Thousands of former MG Rovers workers have had to take pay cuts amounting to as much as £6,000 to stay in work in the few years since the collapse of the firm.

A study into the thousands of former workers from the Longbridge plant found that while 90 per cent had since found a new job, many had been forced to move into the service sector, suffering significant pay cuts.

But the authors of the report said the work to retrain and re-employ the workers had still been a huge success, given the alternatives.

The research, carried out by Birmingham Business School and the Work Foundation, found the collapse of Rover in April 2005, had had a lasting impact on the working patterns and pay levels of the 6,300 people who lost their jobs.

It found two thirds had suffered wage cuts of an average of £5,640 a year, adjusted for inflation. A third of the former workers reported an increase in their salaries. Those who had been out of work the longest suffered the largest drops in income.

About 30 per cent of workers had managed to stay in the manufacturing sector and had largely kept their pay at a similar level. But the majority, who moved into the service sector, were earning far less, according to the authors of the study.

People who found work in four sectors – wholesale and retail, real estate and business services, education, and health and social work – took average cuts of more than £6,000 in annual income.

Almost a quarter of respondents said they were in debt or in need of drawing on savings, 36 per cent said they were just about able to manage on their current incomes and a further 38 per cent said they were in a position to save some money.

But Lord Kumar Bhattacharyya, the head of Warwick Manufacturing Group, warned many ex-Rover workers could find themselves in trouble again, this time from the current financial crisis and economic downturn.

He said: “If there is a meltdown in manufacturing then services will suffer.”

The professor, who earlier this week called for £1 billion of Government aid to help support the manufacturing sector through its troubles, said the Bailey report illustrated how badly this was needed.

The authors of the report, Life After Longbridge, said it carried political and practical lessons for how to handle large-scale plant closures and avoid a regional crisis of unemployment, which would be vital as the recession draws closer.

They said work by local agencies to support, inform and retrain the workers who lost their jobs had been a success in that large-scale or long-term unemployment in the south Birmingham and wider West Midlands area was avoided.

The employment level among former Longbridge workers is actually higher than it is among the general population of the West Midlands. Of the 90 per cent of workers currently in some form of employment, almost three quarters are employed full-time, 11 per cent are self-employed and five per cent are part-time.

Some 28 per cent of the ex-workers said their current job was better than the one they had at MG Rover, 21 per cent that it was about the same and 46 per cent that it was worse. The remainder were unsure. But a majority still said they liked the work they did and expected to be doing it for the foreseeable future.

The report follows the third wave of research into the fortunes of the ex-Rover workers and comes after previous surveys in July 2005 and December 2005. It was written jointly by researchers at Birmingham Business School and The Work Foundation and drew on a representative survey of 204 workers.

The report calls for a mix of proactive and “intelligent reactive” policies to become a “permanent capacity” in order for policymakers to address large-scale redundancies in the future. In addition, it says the government and agencies should ensure employees have the necessary skills to cope as industries change, access to high quality, flexible education and training programmes and support from information and mobility programmes. This is especially important as the short-term economic climate worsens, the authors of the report said.

David Bailey, the director of Birmingham Business School and one of the authors of the report, said: “The collapse of Rover is rightly termed historic because it marked the closure of the last volume car maker in the UK. The finding that many workers are in what they see as worse jobs may confirm people in the view that the ‘newer’ jobs in services are just not quite as good as the ‘older’ jobs in manufacturing they have come to replace, though there are significant numbers now doing rather better than they were.

“However, it needs to be borne in mind just how calamitous the sudden arrival of very large numbers of skilled, unemployed people could have been for the region. For almost all the workers to be in work three years on must count as the central positive finding.”

Fellow author Michelle Mahdon, a senior researcher at the Work Foundation, added: “The jobs at Rover were high quality manufacturing jobs paying above the average for the West Midlands region so it was always likely that workers would not be able to find directly comparable work – over half the respondents are now doing completely different work.

“In general, people’s health and wellbeing was positive three years on and people claimed reasonable job satisfaction and reasonable life satisfaction, although the research was done prior to the recent downturn in the economy. But judged against national levels, it does appear that the ex-Rover workers are now in jobs with slightly lower levels of autonomy, challenge and skill use, and fewer opportunities for progression than other workers in the UK.”

nLife After Longbridge: Three Years on. Pathways to Re-Employment in a Restructuring Economy is set to be released by Birmingham Northfield MP Richard Burden in London today. Read it in full at