April 02, 2010 07:30 ET

Employees Report Rise in Compensation Cuts and Job Restructurings as Layoffs and Hiring Freezes Decline; 3 in 4 Employees Still Willing to Take Pay Cuts to Keep Current Job

Nearly Half Ok With Less Than 10% Pay Cut but Will Likely Want It Back Once Economy Recovers; 1 in 5 Expect to Look for New Job, According to Q1 Employment Confidence Survey

SAUSALITO, CA--(Marketwire - April 2, 2010) -  The jobs outlook may be brightening, but a new survey shows employers are still taking actions that impact employee sentiment. In the first quarter, nearly half (48 percent) of employees1 reported their employers made changes to the number of staff, organizational structure, compensation and benefits or other perks in the past six months, according to the Q1® Employment Confidence Survey of 2,315 U.S. adults conducted on its behalf by Harris Interactive®2. More than half (55 percent) of these employees said their company made changes or reduced compensation in the past six months, up from 50 percent in the fourth quarter, and 17 percent reported their company restructured their job or made their position redundant, up from 10 percent last quarter. Fewer reported layoffs/plans to have layoffs (47 percent) and hiring freezes (34 percent) than last quarter when rates were 57 percent and 43 percent respectively.

Employees also reported fewer concerns about future layoffs and growing confidence in their own job security and job market but reveal they are still willing to make concessions. In fact, three in four employees, including those self employed, (76 percent) report they are willing to take a pay cut if faced with losing their job, and nearly nine in 10 (88 percent) of those currently unemployed jobseekers would accept less than they originally wanted to land a new job. How low are employees and jobseekers willing to go? While age and income are contributing factors, nearly half (48 percent) of employees, including those self employed, said they would accept less than 10 percent reduction in pay to keep their job whereas 41 percent of those currently unemployed but looking are willing to accept between 10 and 29 percent less than they want.

The depth of pay cuts employees and jobseekers are willing to take to keep their job is broken out as follows (percentages may not equal 100 due to rounding):

Level of pay cut Employees/Self-employed Unemployed jobseekers
less than a 5% 25% 13%
between 5% and 9%           23% 21%
between 10% and 19% 18% 26%
between 20% and 29% 6% 15%
more than 30% 5% 14%
not willing to take any cut in pay     24% 12%

However, data indicates employers should be cautious that employees may view such pay cut concessions as temporary. In the first quarter, more than one in four (28 percent) employees whose company has made structural, pay or benefits changes in the past six months reported their own compensation was reduced, and these employees are more likely to expect a raise (69 percent) once the economy recovers than employees who did not have their compensation reduced by their company during the same period (48 percent).

As signs of economic recovery continue, employers should pay attention to other employee job-related expectations. Should the economy and/or unemployment return to pre-recession levels, more than half (57 percent) of employees say they expect a raise, bonus or promotion and one in five (21 percent) expect to look for a new job, which has risen slightly from the third quarter of 2009. Other rebound expectations include:

51% a raise in base salary
27% hiring freezes to be lifted/more employees to be hired
23% health benefits/workplace perks that have been taken away to be restored
22% a bonus
21% look for a new job

"While we're seeing rising confidence among employees in their own job security and the job market, it's not surprising so many people are still willing to take pay cuts to keep or get jobs given the recent history of record-high unemployment and what they have seen their friends and co-workers experience over the last two years," said Rusty Rueff, career and workplace expert, who has run global HR departments at Electronic Arts and PepsiCo before co-authoring Talent Force: A New Manifesto for the Human Side of Business. "As employees start to feel better about the future, employers need to have their finger on the pulse of employee expectations and attempt to bridge gaps in the realities of today's 'new normal' now, not later. Even though most people are willing to take a pay cut to keep their job today, our data indicates they will likely expect a reinstatement of pay or raise once the market improves if not look for a new job altogether."

The quarterly survey measures four key indicators of employee confidence in the areas of job security, salary expectations, re-hire probability and company outlook. The survey also tracks reported employer actions during the past six months. A more detailed summary with tables can be found at Highlights for the first quarter 2010 survey are below:

Job Security: Layoff Concerns Lowest since December 2008 for Self, Co-workers
Less than one in five (18 percent) employees are concerned they could be laid off in the next six months, a rate that has fallen for the fifth consecutive quarter and is down from 20 percent last quarter and 26 percent in the year-ago quarter. Employees are also less concerned their co-workers will lose their jobs in the next six months -- less than one third (32 percent) note fears their counterparts could be laid off, a decline from 39 percent last quarter and 44 percent in the first quarter of 2009.

Job Market: Confidence in Finding a Job Edges Up Among Employed; Unemployed Still Less Optimistic
Should they lose their current job, 38 percent of employees, including those self-employed, believe they would be able to find a job that matches their experience and compensation levels in the next six months as compared to just 30 percent of those who believe it's unlikely. This is an increase from last quarter when more employees (and those self employed) felt finding a job matched to their experience and compensation was unlikely (38 percent) than likely (33 percent). Of unemployed jobseekers, less than one-third (30 percent) think it is likely they will be employed in six months in a job matched to their experience and compensation level, while 31 percent think it is unlikely. Older adults have less confidence in their ability to get hired in this market compared to younger workers. For example, nearly twice as many older employees, including those self employed who are 55+ (39 percent) think it is unlikely they could find comparable position and pay in the next six months than their younger counterparts 18-34 (20 percent).

Salary Expectations: More than One-third expect Pay Increases; Women Less Likely Than Men
More than one-third (36 percent) of employees said they expect a pay raise or cost of living increase in the next 12 months, which is unchanged from the fourth quarter. Almost half of women (45 percent) report they do not expect a raise in the next 12 months, compared to 38 percent of men. However, more Southerners (40 percent) expect a salary increase than those in the West (27 percent).

Company Outlook: Nine in 10 Expect their Company's Six-Month Outlook to Improve or Stay the Same
Employees (including those self-employed) continue to be confident in their company's outlook: only one in 10 (10 percent) expect their company's outlook to get worse in the next six months, while 41 percent expect it to get better and 50 percent expect it will remain the same. This remains largely unchanged over the past two quarters.

For more details and methodology of the survey, see the Confidence Survey Summary and Methodology,

1) For the purposes of this study "employees" were defined as U.S., adults 18+ employed full time and/or part time unless otherwise indicated.
2) Harris Interactive® fielded the Q1 Employment Confidence study on behalf of from March 19-23, 2010 via the QuickQuerySM online omnibus service among 2,315 adults ages 18 and older of whom 1,225 were employed full time/part-time and 210 were unemployed but looking. Data were weighted using propensity score weighting to be representative of the total U.S. adult population on the basis of region, age within gender, education, household income, race/ethnicity, and propensity to be online. No estimates of theoretical sampling error can be calculated.

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About Harris Interactive
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