Credit crunch claiming European jobs

Apr 21 2008 by Nic Paton Print This Article

Nearly a third of British businesses are planning to freeze salaries over the coming months, while a fifth intend cutting jobs as the global economic slowdown starts to bite.

It's not much better across Europe either, the survey of more than 1,000 companies by management consultancy Hay has concluded.

More than a third of Western European companies said they were freezing salaries or considering doing so, with 32 per cent in Eastern Europe and 36 per cent in the Middle East also battening down the hatches.

In fact, across the board 16 per cent of the companies polled said they expected their results this year to be worse than they had originally budgeted.

The fact that 15 per cent of firms globally within the poll were talking of freezing salaries for all their employees was an alarming signal, said Tom McMullen, vice-president at Hay and one of the leaders of the study.

"Short of layoffs or salary cuts, this is as serious as you can get in terms of sending out distress signals," he stressed.

"An analysis of the forecast for next quarter, coupled with the impact of this report, could be the catalyst for much more serious economic measures," he added, ominously.

Among UK firms, more than a quarter also reported they have either made changes or are making changes to healthcare benefits, while a fifth were looking closely at what they could do around retirement or pension benefits.

And nearly four out of 10 said they had either already changed or planned to change their training and development programmes.

Across the EMEA region, a tenth of businesses in Western Europe expected business results to be significantly worse than budgeted.

Africa and the Middle East were generally more positive (with just seven percent expecting worse results than budgeted) and Eastern Europe more optimistic still, at three per cent.

Some 16 per cent of Western European had or were planning to change healthcare benefits, and more than a quarter were planning changes to retirement or pension benefits. In Eastern Europe these figures were 15 per cent for both healthcare and pensions, said Hay.

By far the biggest change was in Africa and the Middle East, where nearly half had or were planning changes to healthcare benefits, and more than a quarter had or were planning changes to retirement or pension benefits because of recent economic events, it added.