PwC Romania Survey: 65% of companies didn’t apply measures to reduce employee costs in the first two months of the state of emergency

Two thirds (65%) of the responding companies didn’t have to apply measures to reduce employee costs in the two months of the state of emergency, according to the HR Barometer conducted by PwC Romania in May.

Cost-cutting companies have adopted a mix of measures applied differently depending on employees’ positions, in general targeting operational staff in areas most affected by the state of emergency. Thus, 11% have applied furloughs with help from the state budget, but without making up the difference, while 15% have used furloughs and covered the salary gap, 17% have reduced working time, with the agreement of the parties or granted unpaid leave, and 4% have laid off employees.

“Since the start of this crisis, most companies have pledged to make efforts to maintain jobs, as can be seen from the study findings. After economic activity slowed, they generally opted to reduce spending that didn’t affect employees, such as postponing investments or adjusting operating costs. If the economic recovery is fast, the negative effect will be greatly mitigated, implicitly on employees. The optimistic scenarios speak of a V-shaped economic contraction, meaning a sudden short-term fall and a rapid recovery. There is a risk, however, that the decrease in consumption and resource availability won’t be temporary and will have a major structural impact. In any case, all forecasts show that this year will end with a recession and the recovery will be gradual from the second half of the year. As such, companies are taking into account all scenarios, with the priority of maintaining jobs and restoring confidence in the economy in the medium term”, says Ionuț Simion, Country Managing Partner, PwC Romania.

In terms of wages, the survey shows that half of the respondents applied the salary increases for 2020 before the state of emergency was declared. The average increase was 5.77%, in line with forecasts announced in 2019. Almost 30% said they won’t increase salaries this year and 15% have changed their salary increase policy to only to critical positions. Benefit packages remained the same for 80% of respondents. The majority (65%) do not intend to change the system of variable payments.

Back to work

Less than a quarter of the companies surveyed (22%) returned to work on 18 May, with almost half not having decided on a return date yet.

In this context, 80% intend to combine work from home with office work, even after the end of the state of emergency (15 May), with a majority taking employee opinions into account.

“Before the pandemic, for those who worked in offices, health at work was not a problem, but it will become so from now on. All forecasts show that we can expect waves of quarantine or absenteeism. That is why many companies are rethinking their occupational health and safety policies, by reorganising the space, purchasing protective equipment for employees and implementing work from home where possible. The success of teleworking will be determined by the opportunities that companies create for employees to interact, learn and be part of a community. This lockdown period revealed a digital skills gap, and investments in upskilling will be essential”, said Oana Munteanu, Senior Manager People & Organisation PwC Romania.

Regarding HR activities, 37% of respondents said that they won’t change their recruitment and onboarding policies, and 30% stated their intention to postpone them until the state of emergency is lifted. Training and development programmes have been postponed by 33% of the respondents, with the same percentage having changed processes and tools, especially as part of digitalisation programmes.

PwC Romania’s HR Barometer was conducted between 14 – 18 May 2020 based on the information provided by 46 companies in the sectors: retail / FMCG, pharmaceutical, IT&C, financial services, automotive, agriculture, industry. 17% of the responding companies have over 3,000 employees, 22% have 1,001 – 3,000 employees, 17% between 501 – 1,000 employees, 31% 101 – 500 employees and 13% up to 100 employees.