Staff Reductions Continue to Trend Down in Q4

Although employers still feel optimistic about the economy and job market, the majority still plan to keep their staff levels the same for the remainder of the year, according to CareerBuilder and USA TODAY's Q4 2009 Job Forecast. The survey, conducted from August 20 to September 9, 2009 among more than 2,900 hiring managers and human resource professionals, also found that job loss should continue to moderate through the rest of year.

In the past few months, many companies have focused on cost containment while in the fourth quarter, these companies will shift their focus to growth. Employers who reduced staff levels or instituted pay cuts will begin to restore compensation levels and rehire employees. Although these indicate signs of economic recovery, hiring and recruitment strategies will move at a slower pace than normal until confidence in the nation's economy is restored.

Here are four employment trends to expect in the fourth quarter:

1. Hiring levels not likely to change
Eighteen percent of employers increased their full-time staff in the third quarter of this year, unchanged from the second quarter. There was an improvement in headcount reductions in the third quarter, as only 15 percent reported declining staff levels compared to 17 percent in the second quarter. Sixty-five percent of employers didn't change the number of employees.

Looking ahead to the fourth quarter of the year, staff reductions will continue to trend down, as only 10 percent of employers anticipate decreasing headcount. Seventeen percent expect to add full-time workers, 68 percent predict no change and 5 percent are undecided.

2. The South will add the most employees; the West will downsize the most
As a result of growth in healthcare, education and energy sectors, the South continues to produce more job opportunities as 19 percent plan to increase their number of full-time employees. Seventeen percent of employers in the Northeast and 15 percent in the Midwest plan to do the same.

In the West, which has been affected by the housing market crash and a slowdown in economic trade, only 14 percent of employers plan to add full-time staff. In addition, the West has the largest amount of employers planning to downsize staffs, with 14 percent expecting to downsize staff levels compared to 11 percent in the Midwest, 10 percent in the Northeast and 8 percent in the South.

3. Compensation levels remain conservative
Compensation increases continue to remain conservative in the next three months. Fifty-one percent of employers have no plans to increase or decrease salaries for ful-time employees in the fourth quarter. Twenty-six percent plan to raise salaries between 1 and 3 percent; 12 percent of employers plan to give a 4 to 10 percent raise and 2 percent expect an increase of 11 percent or more. Just 6 percent of employers plan to invoke pay cuts.

4. Employers will rehire displaced workers and reverse pay cuts
While companies have realized the need to cut back on spending and hiring, they also acknowledge the need to remain competitive. As such, 27 percent of employers report having laid off workers in one area, but hiring in revenue-generating areas like technology, sales, customer service and research and development.

Additionally, of employers who had layoffs in the last 12 months, 26 percent say their company is planning to bring back some employees they let go earlier in the year. Of those rehiring workers, 23 percent extended job offers to displaced employees in the third quarter and 19 percent will do so in the fourth quarter. Twenty-one percent will start bringing back laid off employees in the first quarter of 2010, 15 percent in the second quarter and 10 percent in the latter half of 2010.

About 18 percent of employers have implemented pay cuts in the past year; 5 percent of these employers restored pay levels in the third quarter and 12 percent plan to do so in the fourth quarter. Seventeen percent expect pay to return to normal in the first quarter of 2010, 7 percent guess it will be in the second quarter and another 7 percent predict the latter half of 2010. Forty-one percent of employers are not sure when they will restore pay levels.

Matt Ferguson is the CEO of CareerBuilder.com. He is an expert in the state of the job market, employment trends, hiring practices and workplace issues.

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Friday, October 9, 2009