February 9, 2009 / 3:18 PM / 9 years ago

Employers try to avoid layoffs as economy reels

<p>A couple fills out an application form at a job fair organized by The News-Press newspaper in Estero, Florida January 14, 2009.Carlos Barria</p>

WASHINGTON (Reuters) - U.S. employers are resorting to a range of measures to avoid layoffs as the year-long recession deepens, but analysts expect the steps to have a marginal impact on the overall employment numbers.

The worst financial and economic crisis since the Great Depression has resulted in a surge in unemployment, but an increasing number of companies are cutting back on working hours, freezing salaries among other measures, according to labor experts.

"It's a broad trend. They want to retain experienced staff," said John Challenger, chief executive officer of global outplacing and business coaching firm Challenger, Gray & Christmas.

"They are trying to protect the company for when they come out of the recession so that they have the right people to capture the potential of the next period of expansion."

While reduced working hours and freezing salaries were the most common measures, some companies were instituting forced vacations and furlough programs, which allowed the firms to temporarily shut down operations without moving to permanent layoffs, he said.

Other steps included trimming year-end bonuses, travel expenses and programs like tuition reimbursements.

California has ordered all state government employees to take at least one unpaid day off per month in an attempt to cut costs. Labor attorney Denise Wheeler also reported an increased trend in clients seeking to cut work schedules to cut costs.

"That's especially attractive to clients who can close their whole office one day a week and who also have vehicles that are out on the road five days a week. If they can shut down for that day they could save on vehicle expenses as well," said Wheeler.

The collapse of the U.S. housing market pushed the U.S. economy into a recession in December 2007, which has been marked by massive job cuts as firms respond to the slump in demand.

The economy purged 598,000 jobs in January, the biggest monthly loss in 34 years. That drove the unemployment rate to 7.6 percent, the highest level since September 1992.

Analysts expect the economy to continue bleeding jobs well into 2010, even if the economy starts to recover as widely anticipated in the second half of this year.

They said while cutting back the number of hours worked and giving people time off without pay was a strategy that more and more companies were using, it was likely to have a minimal impact on the overall jobs picture.

"It will reduce the number of hours worked on average, but the numbers are too small to show up in the national numbers," said Bernard Baumohl, chief global economist at Economic Outlook Group in Princeton, New Jersey.

"I don't expect it to show up on a scale where we actually see in the employment numbers a decline in the number of hours worked per week." said Bernard Baumohl, chief global economist at Economic Outlook Group in Princeton, New Jersey.

The average work week has hovered around 33.3 hours since December. But Baumohl said the situation could change if employers asked workers to work part time, a step that would push up the number of underemployed people.

The underemployment rate, which includes people working part-time for economic reasons, jumped to 13.9 percent in January, it highest reading since the Labor Department started tracking the series in 1994.

Reporting by Lucia Mutikani; Editing by Andrea Ricci

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