Magazine article Workforce Management

Revising the Salary Budget

Magazine article Workforce Management

Revising the Salary Budget

Article excerpt

Salary freezes are already in place at many firms, but levels of job insecurity may not be sufficient to allow outright wage cuts.

DATA BANK

EMPLOYERS ARE making major changes in wages, benefits and hiring in response to the ongoing economic slowdown, according to a March survey from the Hay Group. More than 30 percent of companies are freezing or considering freezing base salaries, and 15 percent have frozen salaries for all employees.

One out of five companies are freezing or decreasing staffing levels. A substantial number are also planning to modify their benefit plans.

A February survey from Mercer showed that 16 percent of employers have reduced or are considering reducing their compensation budgets and 33 percent plan to reduce staffing levels.

The key question now is whether rising unemployment has sparked sufficient levels of job insecurity to keep employees on the job as their pay and benefit packages shrink. Boomers who remember official unemployment rates nearing 10 percent during the Reagan years remain relatively unimpressed by the current rate of 5. …

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