Employee bonuses and perks are in short supply this year as businesses struggle to perform in a jittery economy, compounded by the global financial meltdown.
Cutting costs and wasteful expenditure have become essential for companies large and small. Business forecasts for the coming year have been gloomy and ominous. Thus eliminating staff bonuses is seen as a necessary adjustment.
A cross-section of companies, some big and some small and coming from various sectors like food, plantations, garments and services, have either not paid the bonus or delayed payments.
A leading businessman said he knew of some companies that decided to forego bonuses this year. The reason was the economic downturn, especially in the last quarter of this year. A lot of companies have been selling off at below cost in certain cases and they have not been making profits. Others have been seeing their business decline starting from even the third quarter of 2008. "Companies foresee the first quarter of 2009 as being very tricky so if they want to retain staff, they need to conserve right away," he said. It is of no use to give bonuses and perks and then ask them to leave next year, he added.
Other companies who are giving bonuses can afford it, in particular the banks, the businessman said. Some are under pressure to give bonuses by trade unions to stave off any potential strikes, the worst possible scenario in this economic downturn. Some apparel companies are foregoing bonuses this year, most likely due to the hardships the industry has faced over the past year and possibly tougher times to come in 2009 due to the global economic crisis. However, one garment industry head said there were some companies which had given bonuses.
Ashrof Omar, director at Brandix, one of Sri Lanka’s biggest garment-sector groups, said workers were paid their normal bonus while executives received it only if targets were met. “There were no company parties,” he said.
Some large companies were carrying on as usual. Employees at John Keells Holdings (JKH), one of the largest conglomerates in Sri Lanka, said they would be getting their bonuses this year.
Hayleys Director Richard Ebell said bonuses were paid in July and August, based on the financial results of the year. Bonuses were also linked to a company's profitability and were only given if they have performed well, he said adding that Hayleys had brought in a component of variable pay into the company's pay system for the first time in April 2008, a common practice in several companies around the world.