Companies Have Cut Staff, But Expect to Hire Again in 2010

For the first time since Grant Thornton began researching employment issues in its International Business Report (IBR) back in 2003, the number of businesses cutting headcount has exceeded those increasing it. In fact, Grant Thornton's new data shows a global balance of -8 percent compared to +21 percent in 2009 that's a dramatic drop of 29 percentage points.

The survey, which polled more than 7,400 privately held businesses (PHBs) across 36 economies, also showed that:


Businesses in some of the world's more mature economies are suffering the greatest decreases in employee numbers, including Ireland (with a balance of -54 percent), Spain, Denmark (both with -38 percent) and the US (-33 percent). By contrast, emerging markets enjoyed some of the biggest increases in headcount during 2009, including Vietnam (+54 percent), India (+33 percent), Botswana (+31percent) and the Philippines (+29 percent).


Fortunately, on the whole, 2010 looks brighter for employees. Businesses in 29 of the 36 economies surveyed expect to increase staff numbers this year, a global balance of +20 percent (compared to -4 percent in 2009). The most optimistic businesses were in Vietnam (+60 percent), Brazil (+59 percent), Botswana (+50 percent), Australia and India (both +47 percent). European businesses, however, were far more pessimistic than their counterparts elsewhere in the world. PHBs in Ireland, Italy (both -14 percent), France (-10 percent) and Spain (-8 percent) continue to expect to cut jobs.


Even if companies begin to hire again, Grant Thornton's data shows that they're not expecting to significantly increase employee salaries. 36 percent of businesses plan to offer employees no pay rise or reduce pay, compared to 24 percent in 2009. More than half (51 percent) of employers indicated that they plan to increase pay by inflation or above during 2010 but that's down from last year when 64 percent made the same claim.


Half of the PHBs surveyed indicated that they needed to introduce measures to avoid redundancies. These efforts included reducing working hours (11 percent) and redeployment of staff (10 percent), as well as pay cuts, career breaks, reduced benefits and laying off contract staff.


There's no doubt that employment trends have an impact on supply chains. Production levels may be affected, and as I pointed out in yesterday's post, the fundamental integrity of your supplier network may be threatened by a single employee particularly one who's strained economically, disgruntled, or worried about losing his/her job.