Peter Clarke Courtesy of EE Times Europe (12/04/2008 6:30 AM EST)

LONDON — Nobody who is a regular reader of EE Times could have failed to notice the large number of companies that have felt compelled to adjust their costs in recent weeks and months, and unfortunately that has often meant cancelling jobs. A typical ratio for lay-offs has been one job in ten in the latest round, but some companies have been more radical.

However, it is also noticeable that there are alternative ways to cut employment costs, and this was highlighted by news coming out of Taiwan recently (see 'TSMC, UMC looking to cut costs by 20 percent, says report').

In the West the tradition is largely one of cutting jobs to try and ensure the profit and loss account stays positive. How that is done often depends on the level of granularity — both organizationally and over time — at which a company wishes to apply P&L rigor. In Taiwan and elsewhere there is discussion of a different approach; of retaining staff but cutting their hours or even days. These two approaches perhaps display a difference of mentality between a more socially-cohesive east and a more laissez-faire west.

Eliminating jobs is a difficult process, and if not done well can have an impact on the morale of those remaining. While the majority of workers survive, a minority are forced on to the jobs market at a difficult time, or to subsist on savings — and saving is something which the West has not been good at building up in recent years. In other words it's an all-or-nothing approach.

Some might argue that the cut-and-cut-hard approach has advantages. It is decisive and allows those dismissed to move on and seek out different opportunities. It is arguable that this is better than keeping hand- and brain-power tied to an employer but lying idle for part of the time.

It also puts additional labor on to the market thereby increasing the supply and pushing down the price that has to be paid if and when the company wants to hire workers again. Good for employers but not so good for employees.

In contrast, putting a company on a four-day week and enforcing a 20 percent cut in salary spreads the pain around. For some, a 20 percent cut in income might seem hard to contemplate, but for others the move to four-day-a-week working might be welcome.

Short-time working has the advantage of allowing the company concerned to ramp up much quicker when demand returns as it does not have to seek out, recruit and train staff during the post-bust frenzy. It does remain true that such a reduced-hours regime is more appropriate to large, manufacturing enterprises, which in electronics have substantially moved to the east.

However, in these extreme economic times it should be admitted that both ways of cutting costs have a place in both hemispheres. A move to reduced hours or part-time working might be seen as a healthy re-adjustment of the work-life balance along lines it was so popular to discuss in the earlier, boomier part of this decade.

Spreading the work around more workers on shorter hours would have the advantage of keeping more consumers' heads above water and avoiding the sort of systemic economic collapse that very few alive can remember and no-one wants to witness.