The Chicago Tribune reports today that many companies are avoiding or delaying layoffs by issuing temporary, across-the-board pay cuts. For instance, the local office-products supplier Acco Brands is cutting all 2,000 employees' pay 47% over six weeks beginning Feb. 23. The company will "provide short-term financial
assistance to employees put in the 'most extreme circumstances' by
allowing them to borrow from future earnings."
A Watson Wyatt executive was quoted as saying pay cuts and salary and pension freezes are last resorts for many companies. "I remember talking to companies, and we'd go down the list of options
and we'd say temporary pay cuts, and they'd say, 'Can we do that?'"
They can, but they usually don't want to.
"Usually, companies say they prefer layoffs to pay cuts," said Yale
economics professor Truman Bewley. "It gets the misery out the door."
Especially at a moment of such universal economic trouble, I generally like the idea of everyone sacrificing together, as opposed to splitting society into two groups: profound victims and scared survivors.
And more to the point here: Have you ever had to communicate a temporary pay cut? What do you say and how do you say it?