COVID-19 Pay Cuts: How Coronavirus Economy Impacts Salaries, Compensation
The coronavirus pandemic and resulting economic fallout have pressured compensation plans — salaries, bonuses, 401K matches and more — worldwide.
The latest evidence: Thirty percent of employers cut pay in response to the COVID-19 pandemic. Of those, more than half (55%) reported the cuts allowed them to avoid layoffs, according to recent survey results released by Challenger, Gray & Christmas Inc.
Of those surveyed that instituted pay cuts:
- 44% reported pay cuts across the board;
- 34% said the cuts were for executive or senior-level employees only; and
- 11% for certain positions.
- 56% of companies that cut pay said the reductions would last until business conditions allow;
- 25% they would last until the end of 2020; and
- 19% said cuts would be reversed at different times for different workers.
None of the respondents indicated the cuts would last until the pandemic ends, indefinitely, or be permanent.
Amid that backdrop, multiple technology companies have publicly disclosed compensation plan updates and changes amid the pandemic. Examples disclosed in May 2020 include:
- Dell and sibling company VMware froze employee salaries, cut executive pay and suspend 401K retirement plan matching.
- Nutanix confirmed furloughs.
- OpenText temporarily reduced salaries until mid-2021.
Technology Consulting Firms Trim Staff
Meanwhile, big IT service providers and consulting firms have also made job cuts. Accenture, Cognizant, Deloitte, KPMG and PwC have all confirmed layoffs in recent weeks.
Still, the job cuts seem to involve targeted layoffs rather than mass reductions. That doesn’t offer solace to those who lost a job or took a pay cut. But it at least shows the technology industry is holding up reasonably well as businesses world wide seek to automate and innovate their way out of the pandemic.