While the worst of the recession could now be over, the road to economic recovery looks set to be long and laborious.

Unemployment is continuing to rise at a rapid pace and may continue to do so for some time, with some analysts predicting that unemployment will top three million in 2010.

Pay awards have fallen drastically in recent months, with record lows recorded in almost every sector of industry.

One of the reasons for pay awards currently being so low is the spirit of cooperation that now appears to exist between employers and employees. Employees are currently willing to collaborate with their employers to find flexible working solutions that will minimise job losses in their company.

This has led to many workers accepting pay freeze deals and short-time working as a means of helping their employer to save money and ultimately keep their own jobs secure in the current recession.

This innovative approach to work has definitely had a positive effect in mitigating the worst excesses of the recession. However, David Smith, economic editor of The Sunday Times, contends that this collaborative, damage-limitation way of working could lead to the economy itself taking longer to recover.

Smith explained, “What will employers do as business recovers? Those that have introduced short-time working will start to move people back to normal hours and pay. Firms that imposed pay freezes or cuts will not expect to be able to do so for a second year and normality will be restored there too.

“Only then, after the slack has been taken up, will new people be taken on. The flexibility that limited the rise in unemployment could make it slower to fall.”

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