WASHINGTON, April 21 /PRNewswire-FirstCall/ -- U.S. employers' efforts to battle the recession through cost-cutting actions such as layoffs, hiring freezes and salary freezes may have finally peaked, according to an update to an ongoing series of surveys by Watson Wyatt, a leading global consulting firm. According to the survey, most companies surveyed are planning no further hiring freezes (67 percent), organizational restructuring changes (65 percent) or layoffs (53 percent). Although the majority is not planning any further salary reductions (89 percent) or salary freezes (76 percent) in the next 12 months, the number that has already made these changes has risen sharply since February. Mandatory shutdowns (24 percent), a reduced workweek (22 percent) and mandatory furloughs (17 percent) have also risen sharply since February. The survey also found that only one in four employers (26 percent) plans to increase cost-cutting initiatives over the next 12 months, a sharp decline from the 51 percent planning more cost-cutting measures in February. Watson Wyatt's latest survey includes responses from 141 employers and was conducted in April 2009. "Companies have started to move into the next stage of their cost-cutting actions, but are also looking ahead to an eventual recovery," said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt. "There is a recognition that employers will need to be poised for a turnaround, and that continuing some cost-cutting measures such as reductions in force can put them at a disadvantage once the economy improves." Majority of companies not planning cost-cutting actions for the next 12 months Action Planning change in Not planning change (%) next 12 months (%) Have already Have Have not made already made change and made change do not change yet but expect No and expect expect to to make changes to do in next further made or so again 12 months changes expected Layoffs/reductions in force 41% 5% 31% 22% Hiring freeze 29% 4% 43% 24% Organization-wide restructuring 24% 10% 25% 40% Salary freeze 17% 7% 43% 33% Reduced workweek 16% 4% 6% 75% Salary reductions 7% 4% 14% 75% Reduced employer 401(k)/403(b) match 4% 8% 18% 70% The survey found that planned merit pay increases are expected to remain at 2 percent in 2009, but will increase to 3 percent in 2010. Short-term incentive (STI) funding plans have not changed drastically in the last two months either --- in February, companies planned to fund their STI plans at 71 percent, compared with 69 percent now. Only 17 percent of organizations took cost-cutting measures to protect bonus pool funding. The number of companies that report having reduced their 401(k) match has increased by 10 percentage points, from 12 percent in February to 22 percent in April. There has also been a jump in the number of hardship withdrawals from 401(k) plans --- 44 percent of respondents in April noticed an increase in withdrawals, compared with 35 percent in February. "Companies remain under great pressure to reduce costs as the recession continues, and no one knows for sure how long it will last," said Laurie Bienstock, U.S. strategic rewards leader at Watson Wyatt. "While companies are planning for eventual economic recovery, many still face having to make difficult decisions that could affect workforce productivity, future growth and ultimately their bottom line." Other findings: -- Companies continue to add or increase restrictions to company travel policies and eliminate or reduce training --- the share of companies implementing these measures has increased from 69 percent to 77 percent of respondents (travel policy) and from 35 percent to 42 percent of respondents (training). -- For companies that have already frozen salaries or plan to freeze salaries in the next 12 months, 58 percent will institute these changes across the board of employees, while 36 percent will institute a freeze for only certain employee populations. -- Thirty-one percent of companies that have already reduced salaries plan to reinstate them by the end of 2009. For those that have already reduced salaries, 37 percent plan to reinstate and build off them at the next merit increase. To view the April report, "Effect of the Economy on HR Programs," visit http://www.watsonwyatt.com/. About Watson Wyatt Worldwide Watson Wyatt (NYSE:WWNASDAQ:WW) is the trusted business partner to the world's leading organizations on people and financial issues. The firm's global services include: managing the cost and effectiveness of employee benefit programs; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services. Watson Wyatt has 7,700 associates in 33 countries and is located on the Web at http://www.watsonwyatt.com/. DATASOURCE: Watson Wyatt CONTACT: Ed Emerman for Watson Wyatt, +1-609-275-5162, ; or Steve Arnoff of Watson Wyatt, +1-703-258-7634, Web Site: http://www.watsonwyatt.com/

Copyright