Chief financial officers are increasingly anticipating layoffs due to the COVID-19 pandemic, according to a report from PwC. At the end of March, a survey of CFOs in the U.S. and Mexico found that only 16% were expecting layoffs. The latest report, released April 13, said that 26% of CFOs in the U.S. now expect to lay off employees.
The survey found that these expectations differed by industry. Thirteen percent of financial services leaders expect to make layoffs, while peers in industrial products (36%) and consumer markets (30%) said they are more likely to.
The financial impact of the pandemic is now the top concern for CFOs, PwC said, with 75% citing the impact on operations and liquidity and 82% focused on reining in costs. Two-thirds (67%) said they are considering deferring or canceling planned investments. "As we see the economic ramifications of the pandemic continue, workforce discussions are shifting," Tim Ryan, U.S. chair and senior partner at PwC, said in a statement. "We are seeing that without normal revenue flows, many leaders are being forced to make tough decisions around staffing and costs."
All indications are that layoffs, furloughs and other workforce cost reduction measures will not slow down any time soon. The Wall Street Journal recently cited input from multiple economists who predicted that industries heavy with white-collar workers likely will see a "second round of coronavirus layoffs."
While half of CFOs in a recent a recent survey expect to resume normal business activity within Q3, the long-term financial impact to businesses is expected to last years. The most common cuts CFOs are making is in selling, general and administrative budgets, according to a recent Gartner survey, and a Willis Towers Watson report from March 30 found the most common cost-cutting measure within labor was hiring freezes.
A recent analysis from the Federal Reserve Bank of St. Louis estimated that unemployment could surge beyond 30% in the second quarter of 2020. Some companies are still growing amid these shifting economic conditions, with Slack, Zoom and Amazon among the notable examples, but for many industries the worst is yet to come.
This uncertainty hurts employee morale, especially as financial and personal challenges mount. Employee issues around healthcare, paid leave, telework and workplace safety are all magnified by the pandemic. Unemployment claims doubled in March and many still working say they're concerned about the availability and funding of support if they’re part of this second wave of layoffs.
Many lawmakers and advocacy groups are calling for the federal government to provide as much as much support as possible to maintain business continuity, but the process is slow-moving. Most recently, the federal government enacted the Families First Coronavirus Relief Act and the CARES Act.