Salary Freezes a Common Theme in 2009
Almost everyday, a group of new companies is in the news announcing that 2009 is going to be more difficult than they had previously anticipated. They are trying to reduce expectations early on for what could be a very difficult year for most businesses. Employees who are accustomed to getting a raise every year are likely to be disappointed this year with budgets much tighter than usual.
Survey results released Monday revealed that 25% of companies do not plan to offer pay increases to employees in 2009. A year ago, the same survey found that only 5% of companies were considering freezing pay for 2008. In addition to the 25% that have already decided not to increase pay for the year, another 20% of companies surveyed said that they are at least considering a pay freeze for the year. Economists predict that a third of all companies will officially freeze pay increased by the end of 2009.
Employers delivering this bad news to workers are being greeted with a mix of frustration and understanding. While many people are used to working a raise into their budget each year, most are also well aware of the struggling economy and already have low financial expectations for this year. Employers are highlighting the fact that inflation is very low right now in hopes of softening the blow and hoping that rising unemployment numbers will remind employees that having a paying job at all right now is not something to be taken for granted.
Executives will probably be the hardest hit among employees who generally receive pay increases. Currently, 39% of employers do not plan to offer raises in pay to executives in 2009. Those who are planning to increase executive pay will be doing so less generously, as 77% of survey respondents report that their executive compensation plans for 2009 have decreased just in the last three months.
Some employees are looking for ways to earn additional income this year to supplement their regular paycheck. Even part-time work is hard to come by with a growing number of job applicants who have recently lost jobs and a lack of companies with the financial means to hire additional help in this economy.
Although this news doesn’t come as a huge surprise, now would be a great time to review your personal budget goals for 2009 and find ways to live on what you earn without counting on pay increases as the economy continues to struggle.
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Tags: executive pay, inflation, salary freeze, struggling economy
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