With the coronavirus continuing to affect businesses across North America, employers are eyeing a number of cost-containment strategies, including hiring freezes, wage freezes and delayed pay raises, according to a new survey by Willis Towers Watson.
The survey, which polled more than 800 companies during the third week of March, found 42 per cent of respondents have frozen or reduced hiring. Another 28 per cent said they will or might do the same, while 18 per cent said they’ve eliminated or reduced the hiring of seasonal workers, with 35 per cent planning or considering doing so.
“Companies’ highest priorities remain the physical and financial well-being of their employees,” said Adrienne Altman, managing director and North America head of rewards at 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.”
Only seven per cent of survey respondents said they’ve laid off employees. However, 37 per cent said they will or may do so in the future.
In terms of pay, 12 per cent of employers have delayed salary increases, while eight per cent have frozen salaries and 22 per cent said they’re planning or considering either or both initiatives for the future. Fortunately, relatively few employers have actually cut salaries.
Of course, many employers are offering alternative working arrangements. These include voluntary unpaid leaves of absences (nine per cent) and reduced workweeks (six per cent).
The survey also found some employers are paying premiums to critical workers and providing subsidies to manage the costs of working remotely. Some eight per cent of respondents said they’re providing pay premiums (typically 10 per cent above baseline compensation) for critical employees. About a third of employers said they will or might do the same.
Nearly one in six employers said they’re providing subsidies to manage the cost of working remotely, including Wi-Fi, childcare, office equipment borrowing and heat and electricity. Almost a quarter (23 per cent) said they either will do so or are considering doing so in the future.
“We expect companies will continue to evaluate their human capital programs and associated costs for managing people on a regular basis,” said Altman. “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.”