companies discuss reducing or suspending wage increases

According to two private surveys, postponements of the salary increases of the first semester are under analysis or already implemented.

As a consequence of the coronavirus pandemic, more than half of large companies analyze modifying their 2020 salary budget for employees outside the agreement.

According to two private surveys, postponements of salary increases in the first semester or reductions of between 3 and 10 percentage points are under analysis or already implemented. In addition, 8% It has already decided not to give any increase in the first part of the year to the out-of-agreement.

Between March 27 and April 8, consultancy Willis Towers Watson (WTW) surveyed the situation of 2020 salary increases in 380 large companies.

Budgets forecast, on average, 40% increases for its employees outside the agreement, half to be paid during this first semester.

According to the consultation, 54% will make changes to the original salary budget: 19% are evaluating it, 23% will modify it in the near future and 11% have already modified it. Among these last two groups of companies, the modification was or will be downward in 97% of cases.

“In most cases, the increase for the first part of the year has already been granted, because it occurs in March or April. But for me the total increase for the year is in question. We will have to see in July- August, when budgets are reviewed, the depth of the economic crisis to know whether or not we will actually end below the expected increases. The other side is what will happen to inflation, but if business has not moved for more than a month , the choice is to fire people or reduce wages, “Marcela Angeli, director of Talent and Compensation at WTW, told Clarín.

The consulting firm Mercer also highlighted a quick consultation with 193 large companies between April 4 and 6. When asked if they would grant the expected increase for the first semester, 44% answered yes. There are 28% who have not yet defined whether or not to give it, and among those who have already made modifications, 12% will postpone the increase, 7% will reduce it and 8% will not give it directly.

“Many companies implemented the first half increase as planned because they had already reported it or because they are not in a complex situation,” said Ivana Thornton, director of Career at Mercer.

Regarding the second semester, the majority (68%) They have not yet defined whether there will be any modifications and 22% assure that there will be no modifications. 8% indicate that there will be decreases in the budget for salary increases and 2%, increases.

The Mercer survey also asked companies if they evaluate actions regarding the size of the current endowment. 34% answered yes: 20% will suspend the current contracts; 6% evaluate reducing personnel once decree 329 that prohibits dismissals is no longer in force and 4% evaluates suspensions.

The remaining 4% is divided between working hours, salary reduction and eventual hiring. There are 17% who have not yet defined it and 48% who assure that no modifications are planned.

According to a PwC survey of 150 companies, 35% analyze early vacations, 30% suspend staff, 13% leave, 10% voluntary retirement and the remaining 10% analyze salary reduction, reduction of working hours and momentary reduction of executive salaries, said to the morning, Mariela Rendón, manager of People & Change of PwC Argentina.

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