Companies expect HR, budget cuts across Europe and US

Outlook most positive in Cyprus, Switzerland and France, worst in Sweden and Russia

Research conducted for PricewaterhouseCoopers (PwC) shows that, while headcount and HR budget projections vary significantly across Europe, all organisations surveyed forecast reductions to an extent – with some clearly succumbing to urgent pressures to cut costs potentially to the detriment of long-term business health. Additionally, further negative news from related research conducted in the US suggests European organisations may need to steel themselves for further challenges.
The research findings were presented to delegates at the PricewaterhouseCoopers International Human Resource Services conference in Lisbon on May 6.
Of the 700 companies from across 13 countries represented in the European research, more than a quarter (28%) expect their company to decrease headcount this year.
While organisations in some countries are holding their nerve against short-term pressures to cut budgets and shed staff, others are clearly struggling. In Russia, for example, where oil prices could be critical to economic recovery, almost half (46%) of the Russian respondents predict headcount cuts will occur in their organisation this year. Sweden and Ireland are also showing particular strain – with 52% and 40% of respondents anticipating reductions, respectively.
But there is good news for workers in Switzerland, Turkey, Belgium, Poland, Germany and the Czech Republic, where a higher percentage of companies plan to increase headcount – a positive story in the midst of global economic reversal.
Interestingly, in countries where small, family businesses that survive but do not turn huge profits are typical, such as Turkey and Italy, companies appear more positive about headcount than the European average.
In the US, where the same questions were asked at the beginning of 2009, the outlook was more negative with 42% of the 300 respondents expecting to decrease headcount, 40% expecting to reduce training and development spend and almost half (47%) to cut overall HR budgets. If the direction of this bad news is eastward – as could be inferred from the spread of the financial crisis- then companies in Europe and beyond may need to concentrate on flexing their strategies to keep agile.
According to a survey carried out by PwC Cyprus in February and March, the findings concerning job positions in Cyprus during the crisis are very interesting. To the question how will their own business act, 76% of large businesses state that they will not proceed in reductions of job positions, while in the small -medium size sector the corresponding percentage was 40%. However when asked for their general assessment on this subject, 96%-98% of the businesses estimate that reductions of work positions will arise amongst the Cypriot businesses.