Six hundred employees will start working for four days a week from Monday as leading manufacturer Methode Electronics Ltd responds to the global recession by cutting costs.
The company exports electrical equipment to car manufacturers, which have recently seen a sudden decline in international demand as a result of the global financial turmoil. The slump in worldwide automotive sales has meant fewer orders in the company's books.
In fact, yesterday's move comes just weeks after another major manufacturer, Trelleborg, that supplies O rings for the car industry, went for a four-day week in identical circumstances.
The General Workers' Union said the only other option was to reduce the workforce but, thanks to the union's efforts, this was avoided. After a full day of negotiations it was decided that workers would start on a four-day week for the next month, after which the situation will be re-examined.
The union also made sure no one will be forced to take leave and that all employees, including management and those working in the company's factories around Europe, will also have their week reduced.
The president of the Federation of Industry, Martin Galea said a number of exporting companies could expect a similar fate as the international crisis continues to spread.
Workers will have tighter budgets and less spending power, causing a negative multiplier effect throughout the country, he said, adding that any further increases in the cost of living would make the situation worse.
"I don't think we'll be lucky enough to escape the world recession without casualties," Mr Galea warned. A 21-year-old worker said when contacted that, although these cuts were the result of the global economic climate, the situation will sour further if the government went ahead with its plans to increase water and electricity rates.
"I have colleagues who won't be able to afford such a reduction in pay. The government needs to provide some form of alternative employment for them," he added.
In a brief statement, the company said it would be monitoring the situation closely and responding appropriately to protect the interests of all its stakeholders.
Just last week, a leading cosmetics packaging manufacturer, Toly Products, laid off 84 employees after orders dried up.