Layoff Slowdown According to Survey, Health Benefits Won't Recover

August 13, 2009 Few US Employers are planning more layoffs and many planning to reverse course in coming months on cost-cutting initiatives such as salary freezes, according to the survey of human-resource executives at 175 mostly midsize and large U.S. firms by consulting firm Watson Wyatt Worldwide Inc.

The survey found that 33% plan to unfreeze salaries within the next six months and 79% within the next year. In a similar June survey, only 17% of respondents planned to unfreeze salaries within six months. Roughly 60% of the companies responding to the new survey had frozen salaries.

Of the smaller group that cut salaries, 44% of respondents said they plan to restore those cuts in the next six months, and 66% in the next year. More than 70% of the employers with hiring freezes said they plan to resume hiring within the next year. Respondents said they plan to lay off fewer than 2% of their workers in the next year, down sharply from past surveys.

The tone of the survey was optimistic, some still counsel caution.

Many employers see the recession as bottoming out, adds David Wise, a senior consultant at consulting firm Hay Group Inc. "Most companies want to go into fiscal 2010 with the layoffs and salary freezes behind them," he says. But he warns that companies will remain conservative. "The worst thing a company can do after tough times is loosen the reins before the horse is ready to run," he says.

Employee health benefits, cut drastically in recent times are unlikely to recover.

The survey found that 66 percent of respondents that increased the percentage that employees pay for health care premiums do not expect to reverse that decision. Also, 40 percent of respondents are planning to shift more health care benefit costs to workers by increasing the percentage of premiums they pay. Another 41 percent of companies expect to increase the deductibles, copays or out-of-pocket maximums for their 2010 health care plans.

Read a summary of the Watson Wyatt Worldwide survey.

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