Employers look at cost-cutting as COVID-19 impacts economy
As President Donald Trump announced a 30-day extension to social distancing guidelines, employers have begun to eye strategies to reduce costs as the viral pandemic’s total impact still remains unclear.
Due to these concerns, employers have begun considering a series of cost-containment strategies they can do now, which include hiring freezes and, to a lesser extent, wage freezes or delayed raises, according to a recent survey by Willis Towers Watson.
It isn’t all doom and gloom, however, as some employers are paying premiums to mission-critical employees and subsidies to help employees manage unintended costs related to working remotely.
“Companies’ highest priorities remain the physical and financial wellbeing of their employees,” said Adrienne Altman, managing director, North America head, rewards, at Willis Towers Watson. “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.”
Hiring appears to be heavily impacted, with four in 10 companies having frozen or reduced hiring, according to the report. Another 28% will or might do the same and about one in five has eliminated or reduced the hiring of seasonal workers, with more than 35% planning or considering to do so.
Further, one in 10 employers say they have reduced/delayed salary increases (12%) or frozen salaries (8%); however, nearly a quarter (22%) are planning or considering either or both initiatives for the future, the study noted. The good news is relatively few employers have needed to cut salaries to meet budgeting strategies, the study added.