If youre just about ready to ask your boss for a raise, forget it. Many employees will be making less this year than what they did in 2008.
A 3% annual salary raise is usually met with a raised eyebrow. Nowadays, employees should be grateful if their paycheck doesnt go down this year.
The bad news is yet to come
Citigroup executives are not the only ones that are undergoing pay cuts. More businesses are contemplating pay reductions as cost-cutting measures in the midst of the current recession.
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t;Companies are looking for ways to keep their business intact without hurting customer service or quality," said John Dooney, employment manager and HR strategy for The Society for Human Resource Management (SHRM). "This is a potential option.
According to a recent survey by SHRM, 5% of businesses in the last 12 months cut down salaries. Other measures of cutting costs included work hour reduction, reducing benefits, early retirement and wage freezes.
The cost of staying afloat
In the coming months, many more companies will implement salary cuts of 10% to 20% as a way of shaving costs in troubled times, according to Jo Prabhu, CEO of staffing firm International Services Group.
"Companies have to cut costs. If they don't do that they'll go out of business," Prabhu said. "Both the employer and the employee have to accept it as a fact of life."
For the wage earners, a paycheck cut is still hard to accept, even in the face of an economic crisis.
However, the greatest concern for 69% of American employees is hanging on to their jobs, yet a mere 17% would be willing to accept a salary cut just to keep their jobs, according to Adecco USA Workplace Insights survey.
Tiffany Mason, 37, and a married mother of two, was employed as a recruiter for an airline in Orlando when the company announced across the board pay cuts.
Although "it was a job I truly, truly loved, at the time I just couldn't take that cut," Mason stated, "I was already living paycheck to paycheck.
Mason got her walking papers and presently works for a small information technology firm as a recruiter. Because of the current economic climate, she is still apprehensive about the future even though her job is relatively stable.
"I am scared," she admitted, "I hustle everyday to think of ways to save the next penny."
Michelle Schahn, 37, married and a stay-at-home mother of four, said that she had to look for work when her husband Steve's take-home pay got a 20% cut last year.
"It's really frustrating when you work very hard to make it on one income and then you suddenly can't," she complains.
Although Steves job as a project manager at a masonry company is stable, and Michelles part-time job as an office manager helps see them through financially, the couple feel they still have to cut back on expenses.
We appreciate your work but
Employers share the same view and sentiment, said Bernadette Kenny, Adecco Group North America chief career officer. "The first thing every employee should know is that organizations don't like to do this," she said.
"This kind of approach of attempting to retain employees as opposed to layoffs is a new phenomenon," Kenny said. "Organizations appreciate the talent that they have and are doing everything they can to retain that talent."
The author of this article is Benedict Yossarian. Benedict recommends Real Claims for Mis Sold PPI or if your company is facing financial difficulties Wilson Field for Pre Pack Liquidation.
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