What a difference a few months make! At the beginning of 2020, all we could talk about was the candidate-driven market and how jobseekers held the upper hand in deciding who they worked for. Now, due to the coronavirus (COVID-19) outbreak, it seems employers are back in control, but they aren’t hiring.
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According to new research by Willis Towers Watson—a global advisory, broking, and solutions firm—North American employers are contemplating a series of cost-containment strategies, which include hiring freezes, wage freezes, and/or delayed raises, in order to mitigate the growing concern COVID-19 has placed on businesses. Additionally, some employers are paying premiums to mission-critical employees and subsidies to help employees manage costs related to working remotely.
“Companies’ highest priorities remain the physical and financial wellbeing of their employees,” says Adrienne Altman, Managing Director, North America head, Rewards, Willis Towers Watson—in a press release. “However, amid heightened concern over the impact the virus will have on their operations, companies have started to implement some of the same cost control measures we saw during the last recession.”
Among the key findings from Willis Towers Watson’s latest survey:
- Hiring: Over four in 10 companies (42%) have frozen or reduced hiring. Another 28% will or might do the same. About one in five (18%) has eliminated or reduced the hiring of seasonal workers, with more than a third (35%) planning or considering doing so.
- Layoffs: Only 7% of companies have laid off employees, typically hourly wage earners; however, 37% will or may do so in the future.
- Pay: Roughly one in 10 employers has reduced or delayed salary increases (12%) or frozen salaries (8%); however, nearly a quarter (22%) are planning or considering either or both initiatives for the future. Relatively few employers have actually cut salaries.
- Alternative work arrangements: Less than one in 10 employers are offering voluntary unpaid leaves of absences (9%) or reduced workweeks (6%); however, more than a quarter of respondents either will or may do so in the future.
Some employers, in their efforts to help ensure they serve customers, are paying premiums to mission-critical workers as well as providing subsidies to manage the cost of working remotely. The survey found the following:
- Subsidies for working remotely: Nearly one in six employers is providing subsidies to manage the cost of working remotely, including Wi-Fi, childcare, office equipment borrowing, and heat and electricity. Almost a quarter (23%) either will do so or are considering doing so in the future.
- Mission-critical employees: Nearly one in 10 respondents (8%) is providing pay premiums (typically 10% above baseline compensation) for mission-critical employees and those employees who must be present at work and have increased risk. About a third either will or might do the same.
“We expect companies will continue to evaluate their human capital programs and associated costs for managing people on a regular basis. At this point, it appears most companies are attempting to use layoffs and workforce reductions as a means of last resort. While layoffs and workforce reductions may become an unavoidable reality, companies are clearly making every effort to protect their human capital during this period of uncertainty,” Altman adds.
Is your organization part of the growing list of employers utilizing cost-containment measures? What other unique ways is your company trying to save money? Share your experience in our comments section below.