DATE October 8, 2002
FOR Challenger, Gray & Christmas, Inc.
For Release Upon Receipt Fourth Quarter Is Job Judgment Period
JOB LOSS ODDS UP 54% BEFORE NEW YEAR
The odds of being downsized increase by as much as 54 percent in the last three months of the year as employers pare budgets for the coming year, according to a survey of job-cut announcements released Tuesday by international outplacement firm Challenger, Gray & Christmas, Inc.
The Challenger survey shows that in four of the last seven years (1995, 1997, 1998 and 2000), the largest number of job cuts were announced between October 1 and December 31.
This year will probably be no different since there still is no evidence of a significant upturn in capital spending and earnings remain under pressure. The fact that productivity remains strong will also help employers justify further job cutting.
Between 1995 and 2001, a total of 5,275,142 job cuts were announced by American companies. Of those, 1,577,163 job cuts or 30 percent were announced in a year's last quarter. That is 54 percent more than were announced during the second quarters, the period in which job-cut activity has been at its lowest.
"The fourth quarter is a risky time for workers. It is typically when companies finalize their budgets for the coming year or attempt to make last-minute cutbacks to improve the year-end bottom line. Unfortunately, these cutbacks often target payroll first.
"This year will likely be no different in terms of year-end job cutting. In fact, it may be worse in light of continued weakness in the stock market, the virtual absence of capital spending and stagnant wages which will have consumers thinking twice about heavy holiday spending," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas and a member of the labor/human resources committee of the Federal Reserve Bank of Chicago.
"Without income being generated by investors, corporate clients or consumers, companies will remain in a cost-cutting mode."
"Manufacturing activity and growth in the service sector have slowed significantly. The government recorded a drop in the number of temporary workers and the manufacturing sector reduced its headcount by 35,000 workers and cut overtime hours in September. This all indicates that employers are not very optimistic about a rebound anytime soon," said Challenger.
"If the economic outlook has created feelings of job insecurity for workers, that is not necessarily a bad thing," noted Challenger.
"Heightened worries over one's job, channeled properly, can help improve one's chances of staying on the payroll.
"The fourth quarter should be considered the time of the year in which workers should approach their jobs with a heightened sense of urgency. Take on new challenges, figure out ways to improve the bottom line, become the ideal worker," Challenger advised.
"The most important thing to remember is that as you set the bar higher and achieve your goals, do not forget to let your bosses know about it. The biggest mistake made by employees is assuming that their supervisors are aware of their accomplishments.
"Even in small companies, it is unlikely that a supervisor will be up to date on one employee's projects and achievements. After all, the supervisor is probably focused on his or her own responsibilities."
Another mistake, according to Challenger, is using up accumulated vacation and/or sick leave during the last weeks of the year, since many policies spell out that unused time cannot be carried over into the next year.
"A series of last-minute, unplanned vacations at the end of year may be what stands out in a supervisor's mind when he or she is suddenly told to cut staff by 10 percent. Is it more important to use up every day of your vacation time or is it more important to keep your job?" asked Challenger.