How employers are responding to the credit crunch

11.17.08
By Nicholas Storie

The current economic downturn has got employers and employees alike on pins and needles.

With so many companies both large and small making cutting jobs, people have reason to feel uncertain.

A report in Business Week looks at how employers have been responding to financial pressure, suggesting that both positive and negative reactions can be expected.

If you are wondering about your pay raise, you may be able to relax a bit. A recent poll by Mercer, Watson Wyatt Worldwide and Hewitt Associates found that companies plan to increase salaries by an average of 3.5 percent next year.

This is good news if you have been struggling to pay the bills or are hoping to pay off credit card debt.

However, even if they are not cutting back on staff pay, some firms may be looking to improve their bottom line by making job cuts.

The most recent national statistics indicated that unemployment had risen to 6.5 percent in October - and many experts think it will climb further by the end of this year.

Other employers have hinted that they will trim extras, such as bonuses and benefits, to avoid laying off workers.

What this all adds up to is a very nervous time for the American worker. Labor economist Linda Barrington recently told Bloomberg that in an unstable financial climate, employment data is making people particularly nervous.

"The labor market is only reinforcing a very pessimistic picture," she said.

With such an uncertain outlook, you may want to start getting your finances in order to make sure you are prepared in case you or someone in your family loses their job.

Take a look at whether you have enough savings to cover the bills, as well as a healthy credit score in case you need to take out a personal loan.

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