Worker squeeze may be easing

NEW YORK — Employers are winding down three years of aggressive cost-cutting campaigns that have hit their workers squarely in the wallet, a new survey says.

U.S. companies, which have whittled employee benefits and limited pay increases in a quest to preserve profits, are nearing the end of those efforts, according to the survey by the Watson Wyatt Worldwide, a human resources consulting firm.

Just 18 percent of the companies surveyed said they plan to shift more benefit costs to their workers next year, while 56 percent indicated they did so last year, according to the survey.

Only 12 percent of the employers tapped in the survey plan to cut their budgets for salary increases next year, down from 45 percent last year.

In addition, only 5 percent of the employers surveyed said they plan to eliminate or severely cut bonuses next year, down from 16 percent with such plans last year.

"With the pressures associated with the downturn in the economy and then the prolonged soft economy, companies took a lot of cost-cutting measures that affected employees directly," said Laura Sejen, a Watson Wyatt executive.

"Looking forward, however, it appears to be a very different story," she said.

The change in approach is a sign that companies are feeling more confident in the economy, she said.

In addition, after several years of shifting substantial benefits costs to employees because of skyrocketing health insurance bills, many employers also feel they have reached the limit.

"Companies are thinking they need to find other ways to cover the costs of the health care coverage without continuing to ask employees to contribute more year after year after year, Sejen said.

Watson Wyatt, which is based in Washington, D.C., surveyed 358 U.S. companies during June and July, asking about actions they had taken in the past 12 months and plans for the coming year. The company did not calculate a margin of error for the survey.

While companies are concluding the cost-cutting that focused on employees, they are not done yet with revisions in the way they pay bonuses and other incentives.

The drop-off in business of the past few years limited budgets and spurred companies to look more closely at how dollars were allotted for bonuses and how much individual workers received.

Even as those budgets are revived, companies are maintaining that focus, Sejen said. More companies are tying the amount budgeted for bonuses to the performance of the company or business units.

Also, companies are now working to funnel more money to their best performing workers, rather than offering employees similar bonuses with little regard to performance, Sejen said.