More U.S. companies are adopting pay and hiring freezes to lower their labor costs during what is likely to be a prolonged recession rather than depending on further payroll reductions, a private survey found.
The share of companies planning staff cuts fell to 13 percent this month from 23 percent in December, according to figures issued yesterday by Watson Wyatt Worldwide Inc., an Arlington, Va., work-force consulting firm. Fifty-two percent of the 245 employers surveyed have already made staff reductions, up from 39 percent two months earlier.
"With over half of companies reporting that they have already made layoffs, they are now focusing on smaller, more sustainable cost-cutting actions," Laura Sejen, global director of strategic rewards for Watson Wyatt, said in a statement. "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."
The economy has already lost 3.6 million jobs since the economic slump started in December, 2007, the biggest decline since World War II.
Fifty-six percent of the companies surveyed have put in place a hiring freeze, up from 47 percent in a December survey, according to Watson Wyatt. Salary freezes have been implemented by 42 percent of respondents, up from 13 percent, and 68 percent of firms have enacted travel restrictions, up from 48 percent.