Downsizing Trend Takes a Downturn
In a trend that should provide some comfort to workers jittery about their job security, big corporate downsizings increasingly are going out of vogue.
That change of direction in the American economy was underscored Tuesday by a new survey showing that the percentage of employers slashing their work forces has dropped to its lowest level in at least a decade.
The poll, by the nonprofit American Management Assn., found that 19% of the big and medium-size employers surveyed reduced their staffs during the 12-month period ended in June. That’s down from 28% the year before and is the lowest level since the AMA began tracking the figure in 1987-88.
Even more encouraging for job hunters, a growing number of the surveyed companies reported that they are doing more hiring than firing. All told, employment totals grew an average 6.9%, up from 6.1% a year earlier and from 4.5% two years before.
Among California companies, the average employment gain was almost as big, 6.3%. As such, it was another indication that the state’s job market is catching up to the nation’s.
Still, big layoffs are hardly disappearing from corporate America. Citicorp, the nation’s second-biggest banking company, announced Tuesday a combination of job cuts and new hiring that, on balance, would chop its work force by 7,500.
Over the last three or four months, “we’ve been seeing downsizing creep up again,” said John A. Challenger, executive vice president of Challenger, Gray & Christmas, an outplacement firm that tracks layoffs.
The cutbacks, however, tend to be smaller than in years past. What’s more, they are being offset by simultaneous employment growth, particularly in professional and technical jobs. “Companies have an insatiable need for technical people,” Challenger said.
The AMA’s research director, Eric Greenberg, lauded that trend as a sign that the economy has started to produce more high-paying jobs.
Greenberg said the survey results also indicate that such forces as restructuring and automation, which once prompted big layoffs, now are fostering new high-skill jobs at revitalized companies. “We’re seeing the payoff after a decade of pain,” he said.
The AMA poll comes as the nation’s jobless rate, currently at 4.9%, continues to hover around its lowest levels since the early 1970s. Still, much of the job growth earlier in the 1990s came even as many big employers continued to dramatically slash jobs.
What’s more, the poll suggests that good times for job hunters should continue. Although year-ahead projections tend to be no more than rough estimates, the survey found that even more companies expect to add jobs, and fewer anticipate slashing.
Employers, meanwhile, worry about not being able to hire the talent they need. The survey found that 52% of firms consider skilled workers to be in “scarce supply.”
For those workers losing their jobs, however, there is some additional bad news: Employers have cut back on outplacement programs. The share offering outplacement help to all departing workers fell to 31% from 38% the year before. Likewise, 43% offered extended severance pay, down from 46% a year earlier.
The survey polled 1,168 members of the AMA. Half the firms are manufacturers; 85% had annual sales of more than $10 million.
