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Employer survey: Salary freezes will be common in 2021; majority maintaining health benefits


COVID-19 and the economic downturn have forced U.S. employers to examine cuts in compensation and benefits that were considered unthinkable at the beginning of the year, according to Gallagher’s 2020 Benefits Strategy & Benchmarking Survey.

More than 4 in 10 employers surveyed said they plan salary freezes in 2021 for management and executives (43%) and nonmanagement personnel (42%) to preserve jobs in 2021.

In addition, following the viral outbreak, more than 8 in 10 employers (83%) have more strongly emphasized the role of specific benefits within total well-being, including emotional well-being (65%), leave policies (47%), medical benefits (39%) and physical well-being (36%).

The study results, released Wednesday, were gathered from 3,921 employers between December 2019 and May 2020, as well as a series of employer pulse surveys conducted between April and July. Together, the data from these reports captures an in-depth overview of the effect the pandemic is having on hiring as well as employee benefits and compensation.

“Over the last decade, a tightening labor market led employers to offer a robust holistic rewards strategy to win the war for talent, but the pandemic has forced decision-makers to closely examine their benefits and compensation strategies,” said William Ziebell, CEO of Gallagher’s Benefits & HR Consulting Division. “Employers are reviewing their benefit offerings to make sure they address employees’ evolving needs and, at the same time, fit within their organizations’ budgets.”

COVID-19 did not force employers to make midyear adjustments on their health coverage, however.

In June, nearly 9 of 10 employers (86%) had not reduced health plan benefits and didn’t intend to during the pandemic. Additionally, almost 8 of 10 organizations (79%) expected to continue the same health coverage in 2021.

By July, 63% of employers anticipated their health care expenses for 2020 would either align with projections (40%) or be lower (23%), in large part due to avoidance of elective procedures. However, in many parts of the United States, the pandemic is spreading and it’s not yet clear whether health insurers will reduce, maintain or even increase premiums heading into 2021.

To download an executive summary or the full report, visit the Gallagher website.

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