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Low morale is the biggest workplace challenge facing Canadian employers today, a national survey showed Monday.

Seven out of 10 businesses polled this month said "morale issues" are their biggest concern, according to employment law firm Rubin Thomlinson LLP, which conducted the survey.

"The story behind the numbers is a human story," said Janice Rubin, a Toronto-based employment lawyer and founding partner of the firm.

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The recession has caused morale to slide and increased anxiety about job security, while heavier workloads in the face of staff reductions "has added to workplace stress," she said.

"If the recession continues and uncertainty in the workplace remains, we will likely see employee burnout, an increased number of stress leaves, workplace harassment issues and more mistakes being made," Ms. Rubin warned.

More than half of survey respondents said they've laid off staff over the past year, and of those, most cut between one and 10 per cent of their work force. Other cost-cutting measures included slashing budgets, implementing hiring freezes, cutting bonuses, reducing work hours, trimming training and adjusting benefits.

The findings suggest, however, that the pace of layoffs may be easing. Almost half of respondents, or 43 per cent, said they don't expect further job cuts into 2010. One in five, or 18 per cent, anticipate layoffs - though they said there would be fewer terminations than in the first part of the year.

The biggest shift in the workplace, in response to the recession, is "better and more frequent" communication.

Employers' outlook for the economy is mixed. About a quarter of firms think the worst of the recession is over, and 37 per cent are uncertain whether the economy has turned the corner.

The survey was conducted in early June and is based on responses from 219 employers.

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