Canadian companies will have to cut payrolls, economists warn
by admin on 04/02/09 at 2:09 pm
Canadian companies have frozen wages and slashed costs in an attempt to survive the recession while avoiding the loss of skilled workers through mass layoffs. But as economic conditions deteriorate, companies may eventually have little choice but to cut jobs, economists say.
“Generally we’re following the recession script,” said Sal Guatieri, senior economist at BMO Capital Markets. “Companies at first cut back hours worked and defer hiring before they actually slash their payrolls.”
As of January, 41% of Canadian companies had imposed or were contemplating salary freezes and 74% were in the same stage of enacting hiring freezes, a survey of 246 Canadian firms by professional services firm Towers Perrin showed. The survey found 79% of businesses planned to cut spending on travel and entertainment, while 70% would reduce spending on employee events and 49% would make cuts to staff training costs. In comparison, only 7% of firms had made significant reductions to employment, although 18% were considering staff layoffs.
Despite the difficult circumstances, 61% of companies were considering retention awards, salary increases and higher bonus payouts as a means to retain high-performing staff and people in pivotal roles.
Recent Comments