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The New Economy

Six ways bosses can cut your pay – and what to do about it

(Page 2 of 2)

Worldwide wage pressure

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It's a global phenomenon. Compared with the previous six months, fewer companies are planning layoffs through the end of the year, according to Mercer, which surveyed in May more than 2,100 employers operating in over 90 countries. But moves to cut employee compensation are on the rise, Mercer's data show (click on chart above).

Although companies all over the world are trimming compensation, the trends are most acute in the United States, according to the survey. For example: Six in 10 US companies reported that they had trimmed 2009 bonuses. Some 18 percent planned to ask their employees to work fewer hours or take a pay cut in the following six months, up from 11 percent in the previous six months; 15 percent planned to use more temporary or part-time workers, up from 13 percent.

Some firms are also cutting pay directly, but it's not a popular option. "Very few companies, it's still in single digits, actually cut wages," Mr. Gross says.

A first for white-collar Americans

Many hourly workers, especially those in hard-hit manufacturing industries or the airlines, have battled such compensation cuts on and off for the past three decades. They often had contracts and unions to help limit the givebacks. Many European and Latin American nations have worker-protection laws that limit what employers can do. But salaried American workers in white-collar industries, many of whom have never faced such Depression-era moves, are largely unprotected and on their own.

So what can you do in the face of a benefit trim or salary cut?

If your employer has cut your hours because business has dried up, that's not necessarily a bad sign. Your hours may well increase once business picks up, Gross says. If she cuts your salary, that's a signal that that pay may not necessarily come back once things improve.

"When your supervisor breaks the news to you about your pay cut, do not accept anything immediately," writes Caroline Potter for Yahoo! HotJobs. "What you want to do is buy yourself some time. Why? You need to find out all the facts surrounding a salary reduction before you accept it."

A tough assessment

Take a hard look at your company and industry, decide whether it's better to stay or leave, and then negotiate with your current boss – or look for another job.

When you're ready, ask your manager how long it will last, what impact it might have on other benefits, and whether its being applied across the board, writes Paul Barada, a salary and negotiation expert at

Eventually, you may be able to ask to recoup your lost pay, writes Tara Weiss of But come prepared with examples to show your manager why you deserve it.

These days, nothing in the workplace is guaranteed.
– Nothing, that is, except a Twitter feed from us.

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