The restructuring events database contains factsheets with data on large-scale restructuring events reported in the principal national media and company websites in each EU Member State. This database was created in 2002.
Financial Services Financial And Insurance Activities Financial Service Activities, Except Insurance And Pension Funding 64 - Financial service activities, except insurance and pension funding
1,300 jobs Number of planned job losses
Announcement Date
18 March 2008
Employment effect (start)
Foreseen end date
1 January 2011
Description
Northern Rock, a firm that operates in the financial service sector, has announced that it is to cut 2000 to 2,500 jobs at the locations the firm operates in the UK. The firm employs 6,500 across the UK, but the majority of its sites are located in the North East of England. It is thought likely that most of the job losses will affect this region. The job losses will be implemented by 2011, and follows the firm being nationalized by the UK Government in February 2008. The nationalization of the bank occurred as a result of the bank experiencing severe financial difficulties dating from September 2007 in the wake of the U.S. ‘sub-prime’ crisis. Since September 2007, the bank has received approximately 25 billion GBP in financial support and guarantees from the UK Government. This aid is currently under investigation by the European Commission on the grounds of possible breaches of EU state aid guidelines.
The UK Government have responded by creating a taskforce called the ‘Northern Rock Response Group’. The taskforce will include One NorthEast, a regional development agency, and Jobcentre Plus, a Government agency that attempts to boost employment within the UK. Alan Clarke, the Chief Executive of One North East, stated that the announcement was a ‘setback’ for the North East region in the UK, but also expressed optimism that those affected by the job losses would quickly find alternative employment.
The trade union Unite have stated that they will oppose compulsory redundancies and that they are also currently working with management to ensure that the job losses are achieved through voluntary means. Graham Goddard, the deputy general secretary of Unite, stated:
‘The union will be working to mitigate the implications of the recent crisis on the employees, who have been working tirelessly to ensure there is a sustainable business in the future… Unite will now be pressing the company for the detailed plans and will oppose any plans for compulsory redundancies.’
Update – on Wednesday 30 July 2008 Northern Rock announced that it would be cutting 1,300 jobs rather than the previously announced 2,000 and hoped that compulsory redundancies would be limited to 800, with 500 staff taking voluntary redundancy.
Northern Rock's executive chairman Ron Sandler stated ‘This remains a very tough time for our staff but the restructuring of the company is nearing completion and we are now in the final phase of this difficult process.’
The Unite union’s deputy general secretary Graham Goddard stated ‘We are pleased it is not the 2,000 job cuts that had previously been talked about.’
Sources
30 July 2008: BBC News
18 March 2008: The Guardian
18 March 2008: The Financial Times
18 March 2008: BBC News
Citation
Eurofound (2008), Northern Rock, Internal restructuring in United Kingdom, factsheet number 66417, European Restructuring Monitor. Dublin, https://restructuringeventsprod.azurewebsites.net/restructuring-events/detail/66417.
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