Cadbury, McBride, Paramount Foods, Arla, PepsiCo, Bakkavör - the list of grocery companies making redundancies is growing longer.

Though not all such decisions are solely a response to the current economic downturn, in such times employers scrutinise people-related costs more closely than ever.

This is borne out by the unemployment figures and the quarterly CIPD/KPMG Labour Market Outlook, which indicates employers have a bleak view of the economy and that net job creation is at a virtual standstill.

"We are at the start of a period of contraction, with jobs being lost, new jobs hard to come by and unemployment on an ever sharper upward rise," said CIPD chief economist John Philpott.

But redundancy should be a last resort. As PricewaterhouseCoopers identifies, there are other people-cost areas that companies should be assessing in advance of the redundancy route, including pensions, use of contractors, pay and productivity, employee benefits and secondments.

One thing that may help is flexible working, which is in the spotlight following a review that recommended the right to request flexible working should be extended to parents of children up to 16. This was scheduled to come into effect in April next year but is looking shaky following comments from new BERR head Peter Mandelson.

Politics aside, flexible working can offer a sensible way of responding to the economic crisis.

Before you all jump in shouting "more cost, more red tape", just consider the arguments. Firstly, it is happening even before new legislation is implemented. Manufacturers - including Fairline yacht makers and JCB - are leading the way by offering reduced hours to save jobs. Perhaps grocery businesses could consider this?

Secondly, reducing headcount can be a costly exercise, both in terms of redundancy packages and recruiting staff again when the economy picks up.

Mid-market and premium brand companies are likely to have to think most creatively about their people strategies, believes Michael Rendell, partner and global head of HR services at PricewaterhouseCoopers.

"This may mean opening out flexible working, job-share or career break options to people who wouldn't normally qualify," he says. "Suppliers and retailers will be relying on customer loyalty to ride out the downturn, so it's critical any changes to people policy do not damage customer service - consultation with employees will be key here."

There must be a balance between cutting costs now and the risk of damaging business in the longer term. n

Siân Harrington is editor of Human Resources