Company Layoff Plans Expected to Decline, Watson Wyatt Survey Finds

Many Employers Still Planning Salary and Hiring Freezes, 401(k) Match Reductions and Smaller Raises

WASHINGTON, D.C., February 25, 2009 — As the recession continues, companies are looking ahead and expecting to experience a long period of economic hardship. A new update to an ongoing series of surveys conducted by Watson Wyatt, a leading global consulting firm, shows that most companies have already made most of their intended sweeping changes. However, many expect to make further cost-cutting changes this year, such as salary and hiring freezes, and reduced 401(k) matching contributions.

“Companies have come to terms with the fact that this recession is going to last and that they can’t slash their way out of it,” said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt. “Many companies are putting the drastic cuts behind them and are now focusing on smaller, more sustainable cost-cutting actions.”

According to the survey of 245 large U.S. employers conducted last week, 52 percent have made layoffs, up from 39 percent two months ago. However, the number of companies planning layoffs has fallen 10 percentage points from 23 percent to 13 percent. Additionally, 56 percent now have a hiring freeze in effect, an increase from 47 percent in December’s survey.

There has been a jump in the number of companies that have put into place other changes as well. These include salary freezes (up to 42 percent of respondents now from 13 percent in December’s survey), reductions in 401(k) matches (up to 12 percent from 3 percent), a shortened workweek (up to 13 percent from 2 percent) and travel restrictions (up to 69 percent from 48 percent).

Companies continue to change a variety of HR programs in response to cost pressures