Pay cuts are part of recession's toll

CHICAGO, Feb. 17 (UPI) -- Illinois office products company Acco Brands Corp. said it would impose a six-week pay cut of 47 percent to stave off possible employee layoffs.

The move dramatizes a choice -- to cut pay or lay off workers -- now under discussion in many management meetings, the Chicago Tribune reported Tuesday.

"It's an alternative to permanent reductions in force," company spokesman Rich Nelson told the Tribune. "It allows people to stay employed, but we realize it imposes some hardships as well."

Motorola Inc. decided to freeze U.S. pension plans and end contributions to employee's 401(k) retirement accounts recently. Others, such as Tribune Co., have imposed salary freezes, the newspaper said.

But pay reductions are relatively new in the recession that began December 2007.

"I remember talking to companies, and we'd go down the list of options and we'd say temporary pay cuts, and they'd say, 'Can we do that?'" said John Bremen, director of compensation practice at Watson Wyatt.

While some have combined layoffs with pay cuts, FedEx Corp. said it would cut pay 5 percent for 36,000 workers. General Motors Corp. last week said it would cut salaries by up to 10 percent, the Tribune said.