Amid rising layoffs, severance pay drops
Reports of mass layoffs seem to arrive daily, highlighting the issue of fair severance pay. Many of the 100,000 workers laid off from airlines since Sept. 11 appeared set to receive no severance before a handful of carriers, including hard-hit American Airlines, announced last week they would provide them. Will other industries follow?
"Very few companies are even offering [severance]," says David Perry, president and CEO of Momentum Resourcing, a Denver, Colo.-based staffing firm. Mr. Perry says he attributes the steady decrease in severance pay to simple economics. "If [firms] give away the farm on severance, they could go out of business. A lot of the dotcoms just don't have a lot of money."
A recent survey by Manchester Inc., a career consulting unit of Modis Professional Services Inc., shows cash severance packages to workers laid off in 2001 have declined by up to 20 percent from those awarded in 1997, with a 12 percent decline for top executives. It also indicates:
Health insurance is the most popular benefit, followed by outplacement assistance.
The pharmaceutical/biotechnology industry granted the most generous severance benefits in 2001.