DUBLIN - 20 May 2020 – Employers in Ireland are bracing themselves for negative impacts to their business and employees due to the COVID-19 pandemic. Such impacts will be evident in cost management measures, salary and staffing levels, as businesses prepare to weather the expected economic downturn.
The Willis Towers Watson (NASDAQ: WLTW) COVID-19 pulse survey research for Ireland, which was carried out in April, looked at the impacts on businesses with regard to employee costs and practices. The research shows that while overall 64% do anticipate a large negative impact in the next 12 months, many businesses are being proactive in taking measures that will contribute toward future sustainability.
As businesses encounter potential downturns in revenue, it is perhaps unsurprising to see many are readjusting salary outputs. Merit-based salary increases are likely to be reconsidered with 47% of organisations having taken, or are considering, measures to reduce or delay such increases. This does not mean that organisations are reducing salary on an arbitrary basis as the research indicates that 1 in 5 employers (21%) have implemented or are considering implementing base pay reductions for corporate functions such as finance, human resources, IT, procurement, legal, and facilities management.
Employers are also planning action on annual bonuses across their business, with 47% again considering or actively planning a reduction in 2020. The research does however show that 2 in 3 business are not adjusting sales incentive pay outs while others will make discretionary adjustments, suggesting that employers want to continue to reward and retain performing staff.
With the economic impact of COVID-19 continuing to take effect many employers are searching for ways to retain staff through furlough schemes. 58% of organisations have offered or are planning to offer voluntary unpaid leave of absences to interest employees, while 44% have, or are considering, making such measures involuntary for staff.
COVID-19 has also impacted the hiring plans of many businesses. A large number (67%) has delayed making hires, with 60% reducing the numbers they had originally planned to hire. Implementing a hire freeze is also an option being explored by many organisations, with 57% already introducing such a step for the remainder of the 2020 fiscal year.
While many companies have thus far tended to focus on cost control as opposed to direct cost cutting, for some layoffs will be unavoidable in the coming months. Companies are having to consider the contribution, and cost, of specific roles across their organisations with those in Business Support roles being the most vulnerable to any potential staff reduction measures.
Commenting on the survey results, Sarah McDonough, Practice Leader for Talent and Rewards at Willis Towers Watson in Ireland, said; “This research highlights the challenges that lie ahead for both employers and employees in the coming months. Salary reductions have already been reported in the most impacted sectors and many organisations are now preparing for a difficult period ahead. However, the research does highlight another more positive trend – that employers have taken their lead from the Irish government. The government’s message of ‘in this together’ is already informing some of the difficult decisions employers are taking in a number of different ways.”
“The survey shows employers are developing a long-term view of the situation and focusing on retaining and motivating their employees”
Sarah McDonough
Practice Leader for Talent and Rewards at Willis Towers Watson in Ireland
“Already many tough decisions have been taken to postpone annual bonuses and, for many, hiring plans have also been placed on hold. For the most part however, employers are ensuring that jobs and conditions are retained where possible, making use of furloughing and the government Covid-19 payment scheme to maintain current jobs. The survey shows that employers are developing a long-term view of the current situation and focusing on retaining and motivating their employees.”
“In this very challenging work environment, Irish employers also have the opportunity to consider how they use their finite budgets to work with employees in more thoughtful ways and, in so doing, will be better placed to come through this period with motivated and productive employees”.
The Willis Towers Watson COVID-19 Pulse Survey measured attitudes of organisations when facing Covid-19 issues. A total of 996 employers based in Great Britain and Western Europe took part in the Survey, which was conducted during April 2020. A total of 104 employers with Irish operations responded to the survey. The full survey results can be found here.
