Survey One in Four Companies Has Frozen Salaries

By Staff Report

Feb. 9, 2009

One in four companies have instituted salary freezes for 2009, according to a new survey from Mercer. And that total may rise to one in three employers by the time 2009 budgets are finalized, the consultancy predicted.

This year, executives are less likely to get an increase than rank-and-file employees, Mercer said. The biggest budget decrease in the survey findings is at the executive level, where 77 percent of the more than 400 respondents plan to decrease their salary budget from their 2008 projections.

“Given lackluster corporate performance and recent pressure from regulators, shareholders and the president, it’s not surprising to see that over the past few months, more than one-third of participants who reported executive salary data went from a 2009 planned base salary increase for their executives to a freeze,” said Steve Gross, global leader of Mercer’s broad-based performance and rewards consulting business, in a press release.

Organizations still budgeting increases for 2009 have trimmed these to 3.2 percent overall, down almost one-half of a percentage point from mid-October projections of 3.6 percent.

For some of the most troubled companies, even freezing salaries may not be enough to sustain operations. General Motors, racing to meet government conditions to keep $13.4 billion in government loans, will include pay cuts for salaried employees in a restructuring plan to be submitted February 17, Bloomberg reported Monday, February 9, citing people familiar with the plan.

GM has about 29,000 salaried workers in the U.S. The total worldwide firings may match the more than 5,000 salaried positions eliminated last year, the people familiar with the plan said. GM started offering buyouts to 62,000 union workers last week and is in talks with the United Auto Workers about trimming benefits, according to Bloomberg.

Of course, for many workers, the concern is over simply having a job at all. On Friday, the Labor Department reported U.S. employers shed 598,000 jobs, the most since 1974, driving the unemployment rate to 7.6 percent from 7.2 percent.

Filed by Matthew Quinn of Financial Week, a sister publication of Workforce Management. To comment, e-mail

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