Employers opt for salary cuts rather than job losses: survey

28 July 2020 - 07:20 By Naledi Shange
Employers in SA are choosing to save jobs and rather cut salaries, according to a new survey.
Employers in SA are choosing to save jobs and rather cut salaries, according to a new survey.
Image: 123RF/choreograph

When given the choice, most employers who have had to make tough financial decisions amid the coronavirus pandemic have chosen pay cuts over retrenchments.

This is according to a survey by remuneration and HR consultancy 21st Century.

“Where there is financial pressure and crisis management, a large percentage of respondents said they were reducing pay as a preferred choice to avoid retrenchments. There has also been a marked escalation in increase freezes, compared to previous years,” it said.

The company said these findings were based on a series of studies it conducted, aimed at understanding changes in the workplace since the start of the outbreak.

Meanwhile, working remotely seems to be the common trend.

“The results indicate that a large number of organisations currently have more than half of their employees working remotely due to lockdown, and that employees are typically supplied with the necessary tools of trade,” the survey revealed.

“Where employees are able to effectively work at home, the majority of organisations have neither unpaid nor partial pay periods; and it seems that organisations are returning to normal payment as work is resumed and revenue flows into the organisation.”

As infections rise and more employees become affected by the virus, 21st Century said some employers were still in limbo over how to treat the leave taken by an employee as a result of contracting the virus. Some allowed for employees to use their annual leave once their sick leave was exhausted.

Employers also had to make tough decisions over where to place days taken by employees who needed time off to care for their children.

“Several organisations, however, still remain undecided about their response to the pandemic from a remuneration perspective, and are awaiting more data and market response outcomes before making any changes to short and long-term incentive schemes,” said 21st Century.

With the effects of Covid-19 projected to last for a while, the company said it noted that businesses were looking to make more changes and invest in technological development.

“Going forward, 21st Century expects some of the changes brought about by the pandemic to become part of a new — and better — way of working. Indeed this year has in many ways given everyone a true experience of the certainty of uncertainty.”

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