Amcham survey: US firms in kingdom plan job cuts

This week, Amcham unveiled the results of its "Cost of Living Survey 2008", which presented a snapshot of the responses of American companies to rising world food and fuel prices.

Fifty-nine per cent believe some kind of compensation adjustment is necessary and are increasing salaries and subsidies. The largest increases are planned in general allowances and transportation subsidies, where rising energy costs are having the deepest effects.

Amcham Thailand's membership of more than 630 companies represents an investment of over US$35 billion (Bt1,171 billion) and provides more than 250,000 Thai jobs.

The "Cost of Living Survey 2008" was an online survey administered this month and the last, and answered by 166 respondents. It involved 11 questions and focused on businesses' responses to the global rise in food and fuel prices.

For demographic information, the survey asked about company size.

The remainder of the survey concentrated on cost-of-living increases and planned responses. In the next six months, 13 of the respondents (8 per cent) are planning staff reductions or lay-offs. Respondents were asked if they believed an increase in compensation before January next year was necessary. Forty-one per cent answered "no" and were not asked any further questions. The rest of the survey results, therefore, take into account only those 59 per cent, or 96 respondents, who believed a compensation increase was necessary.

Respondents were asked if they were considering actual changes in compensation for the following areas: salaries, allowances, food subsidies, transportation subsidies and others.

More companies are planning adjustments in allowances than any other area, with 47 per cent planning an increase (and the remaining 53 per cent not considering a change). The increase amounts range from 1 to 10 per cent, though some respondents are giving a set monetary amount, rather than a percentage increase.

As for salaries, 40 per cent are planning increases, with an average of about 5 per cent, though the range is between 3 per cent and 10 per cent. Forty-two per cent of respondents are changing transportation subsidies.

Planned increases are particularly high, with some rising 50 to 100 per cent, though the average is about 40 per cent. This comes with little surprise, given the rising cost of fuel.

Only 17 per cent of respondents are developing increases in food subsidies, though again, most of those adjusting are doing so by large factors, some more than 50 per cent. Additionally, some companies are distributing actual food goods, such as kilos of rice, or food vouchers from suppliers such as Tesco-Lotus.

Fourteen respondents (19 per cent) are planning other increases, the most common of which is a standard Cola, or cost of living-adjustment.

The surveyed companies are not predicting a large cost effect from the planned increases. Fifty-six per cent of respondents, who believe some kind of compensation increase is necessary, said the percentage impact of these changes to total compensation costs will be 1 to 3 per cent.

Thirty-seven per cent said the adjustments would increase costs by 4 to 6 per cent and 7 per cent predict a cost change of more than 6 per cent.

Among companies planning adjustments, 60 per cent, either already have implemented the increase or will do so by next month. The remainder are either not yet sure or are planning the changes by the first of the year.