The number of North American companies delaying or cancelling salary increases for employees grew from 14 per cent to 32 per cent because of the COVID-19 pandemic, says a new survey by Aon.

The survey, conducted April 7-10, 2020, says this trend mirrors Europe, where the same figure grew from 17 per cent to 35 per cent over the same period.

In North America, the prevalence of companies asking employees to take reduced salaries on a voluntary basis reached seven per cent, with involuntary pay reductions climbing to 10 per cent of firms. Executive officers are most likely to be covered by these actions, but roughly 40 per cent of firms cutting pay are doing so across their entire workforce.

Companies want to help staff during pandemic

“This data comes at a pivotal time for our clients. We know companies have a strong desire to help their people as much as possible, yet many firms also face very difficult economic conditions,” said Alex Cwirko-Godycki, chief strategy officer for the rewards practice at Aon. “The actions cited throughout our study reflect this dichotomy; efforts to manage costs are accelerating, and at the same time, companies are also taking significant steps to support employees working in new or more difficult environments.”

While companies continue to explore ways to manage or reduce total rewards costs through changes to health and benefits plans and retirement programs, few firms have executed cost-saving measures in these areas.

Some programs remain in place and others provide support

For example, in North America, only five per cent of companies have suspended employer matches, profit sharing, or other non-elective employer contributions for defined contribution retirement plans. Additionally, only two per cent of companies have reduced paid leave benefits.

In fact, the bulk of companies are moving quickly to supplement support programs and leave benefits for employees.

For example, in North America:

  • 70 per cent of companies are providing additional scheduling flexibility to employees with children

  • 57 per cent of companies are providing as-needed payments or equipment purchases to assist employees with work-from-home arrangements

  • 42 per cent of companies are providing temporary increases in sick leave entitlements.