CFOs have lowered their projections for hiring and are increasingly concerned about health care reform and the fate of the Eurozone, according to a new survey.
The survey, by Financial Executives International and Baruch College, found 54 percent of U.S. CFOs plan to hire in the next six months, a statistically significant decline from the 63 percent who were hiring last quarter. Fifty-nine percent of European CFOs do not plan to hire additional employees within the next six months, compared to 37 percent who plan to hire.
CFOs in the U.S. are mostly concerned about the impact of health care reform and the changes they anticipate in their insurance coverage. As a result of coverage regulations from the Affordable Care Act, 41 percent of U.S. CFOs have increased the employee contribution, 31 percent have changed their existing health plan, and 25 percent have decreased the quality of benefits.
U.S. CFOs also anticipate that further changes to their insurance coverage will be needed in response to health care regulations. Increasing the employee co-pay (42 percent), reducing benefits for employees (31 percent) and decreasing the quality of the health care package (23 percent) were at the top of the list.
“Over the next several years, U.S. companies will undoubtedly feel the impact of both the fiscal crisis and many regulatory changes, and in 2013 CFOs are facing challenges as they relate to insurance coverage,” said FEI president and CEO Marie Hollein in a statement. “Our results show that unfortunately employees are going to feel the brunt of this impact, by way of higher premiums and potentially decreased health care benefits. On a macro level, this is most certainly having an impact on their hiring and overall optimism in the economy, and should not be overlooked.”
There were some noticeable differences in CFO perceptions on wage levels by region. The majority of U.S. CFOs believe that wage levels are rising compared with the same time last year (56 percent), while 41 percent believe that wage levels are about the same. Conversely, nearly three quarters of European CFOs believe that wage levels have remained the same (73 percent), while only 19 percent believe these levels are rising.
CFOs remain anxious about the fate of the Eurozone, with 76 percent of European CFOs and 90 percent of U.S. CFOs moderately to very concerned about the fate of the Eurozone. In addition, the survey found that 82 percent of U.S. CFOs and 84 percent of European CFOs predict that a European economic recovery would not begin to take place until 2014 or beyond.
Optimism by U.S. CFOs toward their own businesses decreased slightly to 67.1 (from 69.50 in the fourth quarter), while optimism for Europe CFOs saw a slight increase (59 from 57.50 in Q4). CFO confidence in the global economy fell slightly. In the U.S. it decreased to 50.8, following an eight point increase in the previous quarter (to 52.2); In Europe, it fell to 48.8 (from 51.30 in Q4). U.S. CFOs experienced a slight increase in their confidence toward the U.S. economy from the previous quarter (58.5 from 56.7 in Q4), but it remained lower in comparison to their EU counterparts, which averaged at 62.4 for the quarter (compared with 59 in the previous quarter).
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