In this week's Week in Review: Jobless figures in the U.S., Germany, and Australia continue to increase; some companies turn to decreasing base salaries rather than losing jobs; and India struggles to find middle managers in certain rapidly expanding industries.1. Job Losses Offer Clues to Recovery (WSJ)
Last week's jobless figures showed that the U.S. economy shed 345,000 jobs in May, but certain industries fared better than other ones. After sharp job cuts at the onset of the recession, hiring in the services sector may pick up sooner than it had in past recessions. On the other hand, manufacturing continues to make up nearly half of the job cuts, partially fueled by U.S. auto giants filing bankruptcies and closing plants and dealerships.
2. German Economy to Shrink 6.2% in 2009 (BusinessWeek)
After a poor first quarter, the German central bank expects to see less pressure on the German economy in the latter part of 2009. The bank forecasts the economy will shrink 6.2% in 2009, but expects unemployment to continue rising in the next year to about 10.5%. Some economists believe that Germany's reliance on exports may shift because of reduced global demand, which could potentially impact the high-profit margins previously associated with its high-quality exports.
3. Australian Unemployment Rate Up (BBC)
While Australia avoided a technical recession this past quarter, the unemployment jumped in May to 5.7%, a seven-year high. Total unemployment in Australia has fallen by 9,400 jobs this year.
4. Cutting Salaries Instead of Jobs (Business Week)
While some organizations are proponents of hiring freezes, deferred pay increases, unpaid leaves, and (if necessary) layoffs, a recent Hewitt survey indicates that 16% of organizations are turning to base salary cuts instead in order to protect jobs. Supporters of this latter approach favor this "shared sacrifice in the interest of common good" because it will not only protect jobs, but will put organizations in a better position to fund bonuses in 2009 and even boost morale by avoiding layoffs among highly engaged employees. Opponents argue that cuts to base salary may negatively impact morale and productivity.
5. Shortage of Middle Managers (WSJ)
In India, many new and rapidly growing industries (such as business process outsourcing) are putting a higher premium on finding middle managers. These roles are normally developed over time within existing industries, and new industries often hire middle managers from these existing pools of talent. However, as more businesses spring up in India, the shortage of middle managers has become more acute, particularly in smaller towns in India where companies are building their offices but the talent pool of middle managers are smaller.
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