Benefits April 21, 2009

Watson Wyatt Finds Slowdown of Cost-cutting Efforts

April 21, 2009 (PLANSPONSOR.com) - U.S. employers' efforts to battle the recession through cost-cutting actions such as layoffs, hiring freezes and salary freezes may have finally peaked, according to an update to an ongoing series of surveys by Watson Wyatt.
Reported by

A Watson Wyatt press release said the survey also found that cost-cutting plans for the next 12 months have decreased across the board. Most companies surveyed are planning no further hiring freezes (67%), organizational restructuring changes (65%), or layoffs (53%).

Although the majority are not planning any further salary reductions (89%) or salary freezes (76%) in the next 12 months, the number that has already made these changes has risen sharply since February. Mandatory shutdowns (24%), a reduced workweek (22%), and mandatory furloughs (17%) have also risen sharply since February.

The number of companies that have reduced their 401(k) match has increased by 10%, from 12% in February to 22% in April (see Layoffs Slow, but More Salary, Benefits Cuts to Come ). There has also been a slight jump in the number of hardship withdrawals taken from 401(k) plans – 44% of respondents in April noticed an increase in withdrawals, compared with 35% in February, the press release said.

Companies continue to add or increase restrictions to company travel policies (from 69% in February to 77%) and eliminate or reduce training (from 35% to 42%).

Recovery Expected?

Watson Wyatt also found that only one in four employers (26%) plan to increase cost-cutting initiatives over the next 12 months – a sharp decline from the 51% planning more cost-cutting measures in February.

Thirty-one percent of employers that have already reduced salaries plan to reinstate them by the end of 2009. Thirty-seven percent plan to reinstate and build off them at the next merit increase.

Watson Wyatt’s latest survey includes responses from 141 employers and was conducted in April 2009.

«