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June 22, 2009
Salary and Hiring Freezes to Melt Soon

A survey has found that 62 percent of organizations that have made hiring freezes and 69 percent of those that have made salary freezes plan to eliminate them within the next 12 months.

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The survey was conducted in June by Watson Wyatt, a consulting firm. Also, 48 percent of respondents that have reduced their employer 401(k)/403(b) matches plan to reinstate them in the same timeframe.

Still, some changes made because of the economic downturn will continue. Although 60 percent of employers plan to reverse salary reductions (55 percent within the next year), 20 percent will keep them in place, and another 20 percent are unsure.

Nearly half (46 percent) of respondents said they have no plans to reverse the increases in the percentage that employees now pay for healthcare premiums. The survey included responses from 179 employers.

"While more employers now feel the worst of the current downturn may be behind them, most are not expecting to go back to 'business as usual'," said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt. "The challenge for companies will be to determine which cost-cutting changes can be reversed and which will become ingrained into the permanent business environment."

Other findings:

  • 82 percent of respondents that will reverse hiring freezes will do so only partially, and retain them for some locations or positions.
  • 78 percent of those who expect to reverse a salary freeze said they will do so for all employees, and 78 percent of those who expect to reverse a salary reduction will restore salaries to original levels.
  • 39 percent said they will reverse at least some of their travel.
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