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Human Resources Budgets Decreasing as Business Activity Slows

In 2009, 75% of companies in Switzerland have reduced their HR budgets, and lowered expenses related to salaries and personnel.

Responding to the economic slowdown in Switzerland and the uncertainties of markets, companies have lowered their forecasts for salary growth to roughly 2% for 2009. There are overall substantially fewer job vacancies on the employment market and fewer professionals are electing to change jobs in the current economic climate.

Currently, according to recent surveys, approximately 35% of companies believe their business will shrink in 2009, while another 35% think that their business will remain at the same level; about 20% expect an increase in their sales revenues for 2009.

To reduce budgets allotted to personnel, companies are counting on a variety of measures. First, 50% of employers are planning to reduce hiring or in some cases to fire staff. In order not to lose the talents and knowledge base of colleagues in place they prefer to act primarily on new recruitment rather than to let go existing staff; two-thirds of companies have instituted hiring freezes over the next 6 – 12 months.

Other steps being taken by companies include reducing the variable portions salaries, such as bonuses. Approximately one-third of companies forecast reductions for all employees, slightly less than a third forecast reductions for managers.

About a third of companies will reduce the number of promotions and 20% will push a few months into the future decisions on salaries, which will leave time to examine how the economic situation evolves.

Already many multinationals have announced cost cutting steps to their employees. At the same time, independent HR consultancies note that top companies are reserving considerable funds in the form of special budgets to compensate and retain their top talent and particularly performant staff.

In the current troubled economic climate, HR departments feel themselves under attack: more than 90% of big companies report forecasting reductions for their HR departments in 2009 and about a third are planning to cut HR staff. The reductions are symptomatic of a general shrinkage in recruitment resulting in fewer job opportunities, fewer companies at recruitment fairs and fewer opportunities for graduating students and professionals at the start of their careers, and greater uncertainty in the employment market.

Many companies whose business is recruitment are shifting some of the business activity to coaching, staff development, or outplacement services for their corporate clients.

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