Bangkok--20 Apr--PricewaterhouseCoopers
Over a quarter of CFOs say they expect to lay off employees as they deal with financial impact of pandemic
The third release of PwC’s COVID-19 CFO Pulse Survey reveals 26% of US chief financial officers (CFOs) anticipate layoffs, a marked increase from two weeks ago, when PwC surveyed US and Mexico CFOs and found that only 16% of them were expecting layoffs.
As the crisis stretches farther into 2020, financial impacts of COVID-19 now rate as the top concern, with 75% of CFOs citing the pandemic’s effects on operations and liquidity. In fact, 82% of CFOs are now focused on reining in costs — up considerably from two weeks ago, as they continue to deal with the economic impact of the COVID-19 pandemic. Two thirds (67%) of survey respondents are considering deferring or cancelling planned investments. Most companies are looking to contain costs by halting investments in facilities and capital expenditures, IT, workforce and other areas.
“As we see the economic ramifications of the pandemic continue, workforce discussions are shifting,” said Tim Ryan, US Chair and Senior Partner, PwC. “Many of the business leaders I am speaking to want to do everything they can to protect their workers’ jobs. However, we are seeing that without normal revenue flows, many leaders are being forced to make tough decisions around staffing and costs. Unfortunately, it is becoming increasingly difficult for some to avoid reducing headcount given the continued uncertainty around how long the pandemic will last.”
The prospect of mounting layoffs is reflected by a vast majority (81%) of those surveyed who expect COVID-19 to decrease their company’s revenue and/or profits this year. Furthermore, fewer financial leaders (61%) feel they could return to “business as usual” within three months if
COVID-19 were to end immediately, a considerable drop from two weeks ago.
PwC’s survey of financial leaders also found the pandemic’s impact on workforce investments varies by sector. Only 13% of Financial Services business leaders expect layoffs, while more Industrial Products (36%) and Consumer Markets (30%) CFOs say they expect layoffs.
“Companies are cutting costs and putting planned investments in technology, workforce and capital expenditures on hold while they try to weather an unprecedented economic storm.” said PwC Chief Clients Officer, Amity Millhiser. “Before this pandemic hit, many businesses were focused on long-term growth. Now they are being forced to think short-term and protect their bottom lines.”
Niphan Srisukhumbowornchai, Clients and Markets Leader, Entrepreneurial and Private Businesses (EPB) Leader and Tax and Legal Partner for PwC Thailand, said that together with the third release of the PwC COVID-19 CFO Pulse Survey – US/Mexico findings, PwC also published its COVID-19 CFO Pulse Survey – All countries’ findings, which canvassed some 824 CFOs during the week of 6 April in more than two dozen territories/countries . It found that a majority (73%) of CFOs surveyed in all countries are worried about the potential impact of the COVID-19 on their business, with most (80%) expecting a decrease in revenue. This is in line with the International Monetary Fund’s projection that more than 170 countries will see a decline in per capital income in 2020.
“Cost containment has now become the number one priority for CFOs around the globe, including Thailand, to mitigate the impact of the COVID-19 pandemic – on top of deferring or cancelling planned investments. As for the workforce impact in the short term, CFOs are also concerned about a loss of productivity due to plant shutdowns or widespread illness. Unfortunately, this has prompted many of them to introduce furloughs or even layoffs in some cases.
“It’s clear that as the situation progresses, companies will have to operate in a crisis mode. We’re seeing many companies in Thailand looking to take advantage of government support programmes and relief measures offered in response to COVID-19. However, for those companies that are still in the early stages of crisis management and have yet to make decisions that will shape their recovery, the time is now to finalize action plans. They must also prepare for a longer-term scenario in case the situation keeps dragging on,” Niphan concluded.