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Contact: Mercer Marketing
Tel: +353 1 603 9700

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Ireland
Dublin , 25 June 2009

• 80 per cent of the Irish companies surveyed have reduced staff over the past six months; 73 per cent expect to make workforce reductions during the remainder of the year.
  
• In the past six months, 47% of Irish companies have also frozen salaries or deferred pay increases (25 per cent) while only 9% have decreased salaries.
  
• 63 per cent of Irish companies said employees expressed significant concern about their jobs.

Workforce changes

Some 73 per cent of Irish organisations plan some cuts to their workforce in the remainder of 2009; 80 per cent had already implemented workforce cuts in the six months prior to the survey.

Despite the impact of the weak economy, many companies remain focused on their most valuable employees. Almost one-third of Irish organisations say they will continue to recruit key talent even as they reduce their overall workforce.

Mercer’s study also shows that organisations are beginning to use or consider alternative work arrangements to control workforce costs. In Ireland, twenty nine per cent have already introduced a reduction in hours with a corresponding reduction in pay, with 14 per cent do so on a voluntary basis and 15 per cent on a mandatory basis.

Compensation

The annual base salary budgets of almost half of the Irish companies surveyed are less than 2008 budgets. In the past six months, companies have also been more likely to freeze salaries or defer pay increases than to implement pay cuts. 47 per cent froze salaries at 2008 pay levels and 25 per cent deferred 2009 pay increases, while only 9 per cent decreased salaries from 2008 levels. For the remainder of 2009, most organisations plan to freeze salaries at 2008 levels or continue to defer 2009 pay increases.
  

Regarding annual bonus payments, 75 per cent of organisations in Ireland awarded smaller bonus payouts for 2009 (based on 2008 performance) compared to 2008 bonuses. Only 9 per cent granted higher bonus payments in 2009 compared to 2008. 
   

“As a result of the current market conditions, organisations are moving away from pay based on market competitiveness, focusing instead on internal affordability,” said Patrick Robertson, Senior Consultant in Mercer’s human capital consulting business. “However, companies need to be careful not to deviate too far from market rates of pay or they may find themselves at a significant disadvantage when the economy improves and the labour market becomes more balanced.”

Retirement benefits

With respect to defined contribution retirement plans, 62 per cent of organisations do not plan to reduce the level of employer contributions in the remainder of 2009. Notably, only 4.6 per cent have already done so in the past six months.
 
Regarding defined benefit plans, 25 per cent of organisations intend to take actions to mitigate the risk inherent in these plans during the remainder of 2009. Within the past six months, 34 per cent have reviewed their risk exposure and 16 per cent have changed their investment strategy with 38 per cent likely to carry out an investment review in the next six months. 10 per cent of organisations expect to cut back or stop benefit accruals by the end of the year.

Health benefits

Health benefit usage often increases during a recession and 23 per cent of respondents reviewed health care costs and productivity in the last six months. A further 30 per cent reported that they are highly likely to review costs during the remainder of 2009.  21 per cent have introduced lower cost health plans and 13 per cent increased employee contributions for health coverage. 
    

Looking ahead to 2010, organisations are very or somewhat likely to turn to the changes they know will produce predictable results—continue to increase employee contributions and offer lower-cost plan options (39 per cent).

Employee attitudes

According to Mercer’s survey, job security tops the list of employees’ concerns—63 per cent of organisations said employees expressed significant concern about their jobs.

Notes for Editors

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Contact: Mercer Marketing
Tel: +353 1 603 9700