Layoffs Slow, but More Salary, Benefits Cuts to Come
“With over half of companies reporting they have already made layoffs, they are now focusing on smaller, more sustainable cost-cutting actions,” said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt, in a press release. According to the survey of 245 large U.S. employers conducted last week, 52% have made layoffs, up from 39% two months ago; however, the number of companies planning future layoffs has fallen from 23% to 13%.
Meanwhile, according to the press release, the survey showed 56% of firms now have a hiring freeze in effect, an increase from 47% in December’s survey. There has been a jump in the number of companies that have put into place other changes as well, including salary freezes (up to 42% of respondents now from 13% in December’s survey); reductions in 401(k) matches (up to 12% from 3%); a shortened workweek (up to 13% from 2%) and travel restrictions (up to 69% from 48%).
Survey results also show that the majority of companies (61%) expect the downturn in their performance to last at least until the end of 2009. Approximately half of companies (51%) plan to increase their cost-cutting actions in 2009 and beyond.
Other findings from the survey include:
- Planned merit increases are now 1.7%, less than half of what companies originally planned before the recession hit. Of those who have revised their budgets, 58% did so in the last two months.
- Of those who have already made layoffs, 29% have offered enhanced severance benefits such as extended benefits coverage, extended pay or extended job search assistance.
- Since the economic crisis hit, 79% of respondents have noticed 401(k) or 403(b) participants changing their investment mix to move out of equities (up from 59% in December’s survey); 45% have seen an increase in the number of loans taken (up from 27% in December’s survey); and 35% have seen an increase in the number of hardship withdrawals taken (up from 16% in December’s survey).
- Short-term incentive funding has not changed substantially since October – from a mean of 86% funded last year, current annual bonus pools stand at 71% funded.
Companies continue to change a variety of HR programs in response to cost pressures
align="center"> Already made change | align="center"> Expecting to make change | |||||
align="center"> Feb align="center"> 2009 | align="center"> Dec align="center"> 2008 | align="center"> Oct align="center"> 2008 | align="center"> Feb align="center"> 2009 | align="center"> Dec align="center"> 2008 | align="center"> Oct align="center"> 2008 | |
Add/increase restrictions to company travel policy | align="center"> 69% | align="center"> 48% | align="center"> 34% | align="center"> 10% | align="center"> 16% | align="center"> 21% |
Hiring freeze | align="center"> 56% | align="center"> 47% | align="center"> 30% | align="center"> 10% | align="center"> 18% | align="center"> 25% |
Layoffs/reduction in force | align="center"> 52% | align="center"> 39% | align="center"> 19% | align="center"> 13% | align="center"> 23% | align="center"> 26% |
Eliminate or reduce the hiring of seasonal workers | align="center"> 44% | align="center"> 28% | align="center"> 17% | align="center"> 9% | align="center"> 16% | align="center"> 18% |
Salary freeze | align="center"> 42% | align="center"> 13% | align="center"> 4% | align="center"> 14% | align="center"> 19% | align="center"> 12% |
Eliminate or reduce training programs | align="center"> 35% | align="center"> 23% | align="center"> 10% | align="center"> 15% | align="center"> 18% | align="center"> 18% |
Organization-wide restructuring | align="center"> 31% | align="center"> 23% | align="center"> 14% | align="center"> 20% | align="center"> 21% | align="center"> 23% |
Increase communication to employees about their benefits | align="center"> 31% | align="center"> 32% | align="center"> 35% | align="center"> 27% | align="center"> 35% | align="center"> 35% |
Increase communication to employees about their pay | align="center"> 28% | align="center"> 16% | align="center"> 18% | align="center"> 31% | align="center"> 43% | align="center"> 37% |
HR function restructuring | align="center"> 23% | align="center"> 14% | align="center"> 15% | align="center"> 22% | align="center"> 21% | align="center"> 19% |
Reduce/eliminate other employee programs (tuition reimbursement, subsidized dining facilities, etc.) | align="center"> 23% | align="center"> 12% | align="center"> 8% | align="center"> 18% | align="center"> 12% | align="center"> 11% |
Raise percentage that employees pay for health care premiums | align="center"> 22% | align="center"> 20% | align="center"> 21% | align="center"> 24% | align="center"> 17% | align="center"> 25% |
Reduced workweek | align="center"> 13% | align="center"> 2% | align="center"> 4% | align="center"> 8% | align="center"> 6% | align="center"> 4% |
Reduce employer 401(k)/403(b) match | align="center"> 12% | align="center"> 3% | align="center"> 2% | align="center"> 12% | align="center"> 7% | align="center"> 4% |
Salary reductions | align="center"> 7% | align="center"> 5% | align="center"> 2% | align="center"> 4% | align="center"> 6% | align="center"> 4% |
Early retirement window | align="center"> 6% | align="center"> 3% | align="center"> 4% | align="center"> 6% | align="center"> 6% | align="center"> 5% |
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