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More Companies Anticipating Layoffs

·3 min read
More Companies Anticipating Layoffs
More Companies Anticipating Layoffs

The ultimate economic fallout from the COVID-19 pandemic remains to be seen, but a new survey suggests the number of layoffs is likely to grow.

In a bid to measure the financial health of companies across the country, accounting and professional services company PwC has taken multiple surveys of chief financial officers (CFOs) to see how businesses are being affected by the pandemic. The most recent poll shows an uptick in the number of CFOs who are expecting their companies to make job cuts.

In the earliest days of the pandemic, the safety of workers was one of the top workplace-related concerns. The most recent PwC survey suggests the financial toll of COVID-19 is now taking center stage.

COVID-19’s growing impact on the workforce

Companies are considering many different options to help them deal with projected revenue declines and other disruptions caused by COVID-19. One of the most extreme measures is letting employees go.

More than a quarter — 26% — of CFOs surveyed between April 6-8 said they anticipate their companies will lay workers off in the next month. That percentage is up from March 25-27, when only 16% of CFOs anticipated layoffs. On top of that, 41% expect changes in staffing, such as temporary furloughs, as a result of slow demand over the next 30 days.

There are other staffing-related concerns that are top of mind for businesses: Among respondents, 19% of CFOs worry that their businesses will have insufficient staffing to handle critical work as a result of the pandemic.

Impact expected to be long-lasting

While many businesses were initially confident in their ability to handle the COVID-19 crisis, the idea that the disruptions to businesses will be short-lived is rapidly falling by the wayside. During the week of March 9, 66% of CFOs predicted that their companies would be able to recover from the pandemic within a month.

However, the most recent survey found that only 22% now believe their companies can rebound in one month. The largest percentage — 39% — believe it will take one to three months for their businesses to recover. That was followed by:

  • 22% who said three to six months

  • 13% who said six to 12 months

  • 5% who said more than 12 months

In addition to layoffs, companies are also looking for other ways to minimize the impact of the pandemic. Approximately two-thirds — 67% — of CFOs said they are thinking about delaying or canceling planned investments.

Of those respondents:

  • 82% are considering cutting investments in facilities and general capital expenditures

  • 67% are considering cutting investments in the workforce

  • 55% are considering cuts in operations

  • 53% are considering cuts in information technology

PwC’s methodology

To track changing sentiment among CFOs, PwC surveyed 313 CFOs and finance leaders between April 6-8. Of those respondents, 84% were from public and private companies in the following sectors:

  • Financial services (27%)

  • Technology, media and telecommunications (19%)

  • Industrial products (22%)

  • Consumer markets (15%)

Also, 54 respondents were from Fortune 1000 companies. Earlier CFO surveys took place March 9-11 and March 25-27.