7 ways companies are cutting back this year
My mother in-law received word the other day that more than 10% of the people in her medium sized law firm were being laid off. Fortunately, she wasn’t one of them but it did get me thinking about companies and they types of things I see them doing to cut back.
Here are 7 ways ways companies are cutting back this year:
While we as employees don’t like to admit it, the number one expense most all companies have is employees and thus the most effective way to reduce costs is eliminating jobs. The news is currently full of announcements of companies laying off thousands of employees. Right now, more than 12.5 million American’s are unemployed and the numbers are expected to rise, driving the unemployment to a 25 year high of 8.1%.
Another large expense for most companies is employee travel. If you work in a company and travel frequently or work with people that do, expect to see travel budgets significantly decrease this year. Companies are encouraging the use of technologies such as video conferencing, Live Meeting, and conference calls in lieu of travel. Additionally, if you are traveling, expect lower caps on hotels, food, rental cars, and flights. The days of flying first class are over.
A recent survey by Wayson Wyatt showed that 35% of employers have reduced or eliminated training all together. If you had planned on company training this year, you might want to go ahead and expect that it may be canceled. Instead, consider self training by reading books and utilizing the internet to keep your skills sharp.
Over the past few years, I’ve seen my portion of my health care costs go up as my employer pays less and less. I expect this trend to continue especially as health care costs continue to sky rocket. Another way employers are cutting health care costs is by raising deductibles. More than 18% of employees had deductibles of at least $1,000 recently, an increase of 6% since 2007.
Raises and Bonuses
Don’t expect a raise this year and if you do receive one, expect it to be low. More than 65% of employers have reduced their raise or merit increase budgets within the last few months. Average expected employee raise amounts for 2009 is 1.7%, 2.15% less than the current rate of inflation. This is a great reason to look at ways to cut your spending.
Used to get a bonus each year? Might want to set your expectations to not receive one at all this year. Many companies have all but eliminated bonus programs or a the very least have slashed bonus budgets significantly.
A few major companies, including General Motors have stopped contributing to employee 401k programs. While this is currently an extreme measure, I do think you’ll see an increase in companies reducing their 401k contributions. The good news is that in the past companies that did this only did so during periods of extreme cutbacks and lower profits. They returned to contributing once their bottom lines improved.
Regardless of company contributions, employee 401k programs are still one of the best ways for long term savings.
One of the more extreme measures I recently read about is employers forcing employees to take unpaid furloughs in an effort to reduce overall costs. These furloughs require employees to take days off without pay. Furlough programs have been implemented by 11% of surveyed employers, and 6% said they planned to this year.
Furlough programs are hitting employees hard due to already tight economic conditions. Employees impacted by furlough programs are having to find temporary employment at of often significantly reduced salaries in order to try to make ends meet.
Have you been impacted by any of the above cutbacks? What other additional cost cutting measures have you seen or heard of? Add a comment!
Photo by: joelogon