CFOs Worry About Wage Increases

“Employment is expected to grow by only one percent next year, a notable worsening of the employment expectations expressed by CFOs just last quarter,” said Campbell Harvey, professor of finance at Duke commenting on the latest findings of the Duke University CFO Outlook Survey.

The reason for the slowdown in hiring expectations could be attributed to anticipated wage increases. CFOs were asked to choose the top three risks, from a list of 10 that could affect their companies in the coming year.   More than one-third of CFOs report that wage increases are among the top risks their corporations face in the next 12 months. Across the sample, 95% of firms predict that their wages will rise, with an average increase of about 3%.

The continued rise of health-care costs is also of concern for CFOs.   Increases in health-care costs are expected to average 9.2% in the next 12 months.

With the rising cost of employment, CFOs are increasing looking outside their corporate compounds for more economical alternatives, one of which is outsourcing.   Approximately half of all firms polled expect to increase their outsourcing activities, with the average number of outsourced employees increasing by 9%.

A more detailed copy of the survey results is available at   http://www.cfosurvey.org.