Study: Companies are avoiding layoffs by cutting salaries

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Instead of cutting staff members, more companies are starting to slash pay, according to new research.

Slightly more than half of the human resource executives surveyed in May said they had lowered or frozen staff salaries, according to Chicago-based outplacement consultancy firm Challenger, Gray & Christmas. In January, 27.2% said the same.

Many other companies are scaling back employees’ hours, withdrawing tuition reimbursement, implementing mandatory furloughs or forced vacations and even using temporary layoffs to meet the bottom line.

The pay cuts may be tamping down on permanent job losses: Just 43% of employers said they were still laying off staff members, compared to 56% in January.

And although some executives may be holding off on layoffs to preserve morale, many cannot afford to lose more staff and are concerned about having to recruit and train new employees once the economy recovers, the Challenger firm said.

Still, fewer companies said they had to use cost-cutting measures at all -- 86% compared to 92% in January.

-- Tiffany Hsu