Optimism among chief financial officers in the U.S. has fallen, but spending plans indicate continued moderate growth over the next year. Hiring will be minimal - less than 1 percent over the next year - though many companies plan to reinstitute some employee benefits.
These are some of the findings of the second quarter 2011 Duke University/CFO Magazine Global Business Outlook Survey. The quarterly survey, which concluded June 3, 2011, asked 806 CFOs from a broad range of public and private companies about their expectations for the economy.
Benefits, Wages and Hours Worked
Employment benefits were slashed during the recent recession, but CFOs now indicate many of these benefits will be reinstated in the coming year.
Among U.S. companies that had cut employee training and development, 46 percent say these programs have already been or will be reinstated to pre-recession levels within the next 12 months. Sixty-one percent of firms indicate weekly hours worked will rise to pre-recession levels. Wages are expected to rise by 3 percent over the next year.
"Though the expectations for new job creation are weak, those who are employed should see their benefits and wages improve over the next year," said John Graham, professor of finance at Duke's Fuqua School of Business and director of the survey. "This should solidify the financial position of those currently employed, which will bring much-needed spending to the economy. But it will also magnify the gulf between the haves and have-nots."
U.S. companies expect domestic employment to increase by 0.7 percent over the next year. This rate of growth is down from last quarter and implies that, over the next year, the U.S. economy will average fewer than 100,000 new jobs created each month.
"CFOs are telling us we are stuck at 9 percent unemployment for the next year," said Campbell Harvey, a professor of finance at Duke's Fuqua School of Business and founding director of the survey. "One leg of the economy is shackled by extraordinarily high unemployment and the other by the housing market still in a free fall. Obviously, it is hard for the economy to move forward."
Still, there is some good news on the employment front: 21 percent of companies say they are actively hiring, with the strongest activity in the tech, retail/wholesale and energy sectors. Jobs in high demand include engineers, product development, sales force and finance/accounting.
Nearly 10 percent of firms say they would like to hire, but cannot find employees with the right skills, and 16 percent say they would like to hire more but are resource constrained. Only twelve percent of firms say they are overstaffed for current demand.
"Overall, there is pent-up demand to increase workforce, but firms continue to hold off due to a generally weak economic environment and an inability to find the skills they need," said Kate O'Sullivan, deputy editor at CFO Magazine. "One encouraging sign is that the strong capital spending growth of recent quarters is expected to add to employment."
CFOs were asked whether the recent rapid growth in capital spending was leading to machinery that might replace employees and therefore reduce labor force, or whether their capital spending would increase the need for employment. Thirty-eight percent of companies report capital spending will lead to increased employment, while 52 percent say it will have no effect. Only 9 percent say that capital spending will lead to reduced employment.
2011 Median Pay Increase Budgets Are 3%, SHRM Online Compensation Discipline, May 2011
Modest Job Growth, Recruiting to Continue in June 2011, SHRM Online Staffing Management Discipline, June 2011
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