As concern over the effect that COVID-19 will have on their businesses escalates, North American employers are eyeing a series of cost-containment strategies that include hiring freezes and, to a lesser extent, wage freezes or delayed raises, according to a survey by Willis Towers Watson, a leading global advisory, broking and solutions company. 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,” said Adrienne Altman, managing director, North America head, Rewards, 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.”
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 to do 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,” said Altman.
About the survey
A total of 812 companies, of which 63% were multinationals, participated in the Cost Containment and Premium Pay Considerations Survey, which was conducted during the week of March 23, 2020. Respondents employ nearly 9.3 million workers.