Companies can choose from at least five ways of slashing labour costs before resorting to layoffs, considers Ruxandra Stoian, a HR consulting services manager with PricewaterhouseCoopers (PwC) Romania.
Layoffs should be the last option on employers' list, which should be resorted to after all the other options have been used. In recent months, several companies have announced massive layoffs as a result of the falling orders from international markets. Industrial and automotive firms have operated the broadest layoffs. Stoian says that it is during these times that the role of HR people becomes essential, as they have to come up with alternative solutions for the company, before collective layoffs become the last choice.
One of the options employers operating spending cuts can look at is revising the wage benefits package, which does not necessarily imply lower wages. " (...) One can erase those benefits that bring high costs for the company and are little put to use by employees," explains Stoian. For instance, an employer offering fitness subscriptions and noticing just 10% of employees use them can cancel this benefit type.
"Companies do not make such moves out of the blue. But when the alternative is cutting jobs one considers what could be done to shun such a situation". Another option some companies have already considered is cutting wages, but such a move depends on employees' consent.
"A company can decide to reduce wages so as not to be forced to lay off people. Another possibility is that of job sharing, meaning an employer who has two secretaries and becoming aware he only needs one, can cut the working hours from 8 to 4 for each of the 2 secretaries so as not to be forced to cut jobs and to halve wage costs. Wage freezing has already been mentioned as a "very realistic" scenario for 2009. While there are no statistical data on the modification of intentions to raise wages, at present most companies are reviewing their wage policies, according to PwC data.
"Next year, we may have two scenarios. A 'crisis' one, where the company is in a financial crisis it expects to last for at least six months and has to embrace a survival policy. In this case, wage increases will be limited or even zero for all employees". In case the company is under no major financial pressure, wage hikes will exceed the inflation rate by about 3-4%.
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