Over 40% of Spanish Firms Plan To Cut Their Workforce Due To Covid-19

Caixabank, Telefónica, El Corte Inglés or Iberdrola, the Spanish firms best prepared to confront 201969% of the Spain's companies consulted admit that the pandemic will have a significant negative impact on their business in the next six months

More than 40% of Spanish companies are planning or considering cutting their workforce due to the impact of Covid-19. At the same time, 25% of firms have frozen salaries and 16% are reducing them, according to a survey of nearly 1,000 European organisations, carried out by consultancy group Willis Towers Watson. More than one hundred Spanish companies are included in the survey.

The study shows that in Spain, 69% of the companies consulted admit that the pandemic will have a significant negative impact on their business in the next six months. Meanwhile, 59% believe this will extend over the next year and 45% that it will even spill over into 2022. Only 4% said they did not foresee a negative impact in the next 12 months, a percentage which rises to 16% if a 24-month period is taken into consideration.

The organizations consulted also report they are considering freezing or have frozen (73%), postponed (83%) or reduced (79%) new contracts. In fact, 19% of the companies which participated in the study are already immersed in staff reduction plans and a further 24% are considering it.

Those employee groups related to manual work, the production chain and business support are the most likely to lose their jobs in the next 3 months, according to the study.

25% have frozen salaries and 16% are reducing them

With regard to remuneration, more than half of the companies surveyed are considering or have already implemented the deferral or reduction of salary increases. Specifically, 25% say they have already frozen salaries and 18% say they are considering it. Furthermore, about 16% have carried out or are carrying out salary reductions and an additional 10% are assessing it.

According to the report, for the time being, about 20% of the companies surveyed have temporarily reduced the fixed salary of some of their directors/executive directors as a result of Covid-19. An additional 20% are still considering it, with such reductions typically ranging from 20%-30% of the base salary.

Most firms will not change long-term incentives

As for companies with variable remuneration policies, only 25% say the pandemic will not impact their model. Two out of three are considering or have already made adjustments to the objectives to which the annual bonus is linked. As for the nature of these adjustments, most of these organisations (60%) have not yet defined them.

On long-term incentives, a clear majority of companies (80%) do not plan to change the design of the incentives. With respect to plans of this type which involve an offer of stock, a considerable percentage (40%) have not considered making an adjustment to the number of shares granted, despite the sharp fall in their value.