US cos begin to restore pay levels and re-hire former workers

NEW YORK: As the economy shows signs of recovery, American companies are switching their focus from cost curtailment exercise to restoring pay levels and re-hiring laid off workers, says a latest survey.

According to a report by the US job portal CareerBuilder and USA Today, about 27 per cent of the employers reported that over the last year, they have laid off workers in one area, but hired in another.

With the economy showing signs of stabilisation and employers see potential improvement in their business prospects; they are reversing strategies taken to manage through tough economic situations.

The report noted that one in four employers is planning to bring back some employees they let go earlier in the year. Of those rehiring laid off workers, 23 per cent have already started extending job offers to former employees in the third quarter, while 19 per cent would begin to do so in the fourth quarter.

About 21 per cent would start bringing back laid off employees in the first quarter of 2010, while 15 per cent are waiting until the second quarter of 2010. Others are holding off until the latter half of 2010 and beyond.

The report which surveyed more than 2,900 hiring managers and human resource professionals revealed that about 18 per cent employers who have implemented pay cuts in the last 12 months, five per cent of them restored pay to previous levels in the third quarter.

While, 12 per cent of the employers plan to do so in the fourth quarter. About 17 per cent expect pay to return to normal in the first quarter of 2010, 7 per cent expect it would be the second quarter, while another 7 per cent are predicting the latter half of 2010.

The report further found that one in ten employers stated their organisations don't plan to restore pay to previous levels until 2011 or 2012, while 41 per cent are not sure.

"Companies are switching their focus from cost containment to growth. Employers who have instituted pay cuts or layoffs in the last year are reporting that they have begun to restore compensation levels and rehire employees."

"While these are positive indicators, pace of hiring will remain restrained. It will take time to rebuild confidence needed in the nation's economy to trigger more robust recruitment programs," CareerBuilder CEO Matt Ferguson said.

The companies have primarily hired workers in technology, sales, customer service and research and development sectors.

At the same time the survey also pointed that 17 per cent firms expect to add employees in the fourth quarter, while 10 per cent anticipate a decrease in head count and 68 per cent expect no change while rest are undecided.

Meanwhile, most of the employers anticipate no change in salaries for employees in the next three months. About 40 per cent expect to raise salaries between 1 to 11 per cent or more. While, only six per cent plans to decrease compensation and 4 per cent reported their company is undecided.