Like Many Animal Species, the Recession Threatens the Extinction of Many Employee Benefits

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Although the recession hit the global economy very hard, the business environment survived the impact, but many employee benefits have become as endangered as pandas, cheetahs, elephants and many other living species threatened with extinction. According to various studies, U.S. employers eliminated an average of as many as five major employee benefits during 2009.

You may or may not have eliminated the following benefits, but many companies have to survive until the economy becomes robust again.

1. Luxury Perks: Executives and many other employees certainly enjoyed the free limo service to and from the airport, high-priced client dinners and rewards programs that included paid vacations and expensive electronic toys; however, this is one benefit that many experts think will never return.

2. Pension Plans: This benefit had been virtually eliminated before the recession of 2009, so that event only reduced the number of plans further. In fact, studies show that only 21% of private-sector employees have defined-benefit pensions today. Most employers have replaced pension plans with 401(k)s and other retirement programs.

3. 401(k) Employer Match: This was one of the few cash-flow-reduction strategies available to employers during the recession. One research group reported that 34% of U.S. employers had reduced or eliminated their matching contributions during the period April 2008-March 2009. It was a double-whammy for employees; their employers’ contribution to 401(k)s plummeted at the same time the weakened stock market shrank employees’ retirement accounts.

4. Salaries, Raises and Bonuses: This is one “species” of employee benefits that many experts expect to survive, and even thrive, once the economy rebounds, although a 2099 employment trend survey indicated that more than half the companies surveyed had to cut or lock salaries. During the recession and the recovery period (which will include all of 2010 and probably much of 2011), many employees have had and will have to be content with just having a job.

5. Educational Tuition Support: The 2009 survey of an educational group revealed that only 29% of U.S. employers offered tuition reimbursement or scholarships to recent M.B.A. graduates. Thirty-seven percent received that support during 2008. This is another double-whammy for employees (and at least a single for employers), since they can’t improve their knowledge either to qualify for advancement and a higher wage/salary with their employers or be better prepared than their competitors in the labor market if they become unemployed. Employers may have had to cut this assistance, but it doesn’t help further the education of their workforce, so it can be more productive and efficient.

6. Holiday Parties: According to recent trends and the experts, this employee benefit is likely to go the way of the dinosaurs at many companies never to return! While 87% of companies hosted holiday parties during 2006, the number dwindled to 81% for 2009; and another 15% said there wouldn’t be parties during 2010.

Of course, many of these employee benefits are more important and marginally necessary than others; others are nice, but unnecessary. (The expensive wining and dining of a client to “influence” him or her to sign a contract is no longer very effective.) Employers and employees must both be patient during the recovery period, and then re-assess which employee benefits will continue or be re-instituted.

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