Canada’s labour productivity fell in the fourth quarter of 2008 for the fifth time in six quarters, according to Statistics Canada.
Productivity, a measure of how much an employee produces in an hour of work, fell 0.5%, surprising economists who had predicted a 0.1% gain. Gross domestic product of businesses fell 1.3% while hours worked declined 0.8%. StatsCan says that declining productivity increases the risk of inflation.
The pace of growth in unit labour costs increased from 0.7% in Q3 to 1.6% in Q4.
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Executive Pay being Squeezed
With executive compensation currently commanding an inordinate share of media attention, there has been a sharp increase in the number of companies freezing salaries and adding clawback policies to their executive pay programs over the past three months.
Watson Wyatt Worldwide’s survey of HR and compensation executives at 145 companies found that the number of respondents that have frozen salaries has jumped to 55%, up from 21% in December. Approximately half (48%) of respondents plan to decrease this year’s bonus pool by an average of about 40%, while 23% have added a clawback policy.
“The recession has shone a light on executive pay, causing many companies to re-evaluate the long-term implications of their executive pay policies,” says Andrew Goldstein, North American co-leader of executive compensation consulting with Watson Wyatt. “Although boards are under pressure to make changes, it’s still not clear whether the changes they have made have been aggressive enough to placate shareholders.”
Thirty-seven percent of the companies that have already reduced or plan to reduce long-term incentive grants said they did so because it was the “right thing to do in response to shareholder value,” while another 34% cited declining competitive pressures from the market. Other reasons included a lack of shares available in the plan (29%), managing dilution or the run rate (32%) and poor company performance (23%).