Without generalizing the situation across the entire market, the data we have observed during this period show cases of salary reductions among partner companies, with higher percentages of decrease particularly among executives.

According to our estimates, about 10% of the companies analyzed resorted to salary cuts, while approximately 10-20% accessed technical unemployment benefits reimbursed by the state during April to June.

Even though at the beginning of April, when we conducted a mini-study among our partners, which included over 200 multinational and local companies from various sectors, the majority of respondents (around 70%) did not anticipate or consider measures aimed at reducing salaries, let alone terminating employment contracts, the overall context that led to a deterioration of the economic situation, restrictions in certain sectors, and unpredictability prompted them to selectively use the aforementioned methods. In fact, economic unpredictability is the primary concern for decision-makers in the companies participating in the study, followed by a much lower percentage of concern regarding revenue declines.

How Much Have Salaries Decreased in Certain Industries?

When referring to salary reductions, the percentages varied from company to company, generally ranging between 5%-25%. In some cases, reductions of 45%-50% were recorded for top management salaries. These percentages were applied differently for top and middle management, and in many cases discussed, they pertained to a limited period of about 1 to 3 months.

For the remaining employees in these companies, alternative solutions were preferred, such as reducing the workweek from 5 to 4 days or unpaid leave for a few days each month. Additionally, not all employees were affected by these reductions; rather, 35% to 80% of the employees in the analyzed companies were impacted.

The sectors from which the companies that implemented salary cuts originate are extremely varied, ranging from healthcare (such as laboratories) to construction materials, oil & gas, manufacturing, consumer products, and those intended for housing.

Which Industries Have Experienced Layoffs?

There are also sectors such as construction or building materials, industrial production, and automotive, where partial layoffs occurred. These segments were impacted for several reasons: partly due to restrictions that affected their operations, forcing some to halt their activities entirely, and later due to a decrease in demand for the goods produced. For the multinational companies with office activities, there are currently no market signals suggesting that the situation is such that it would require a reduction in existing staff. On the contrary, businesses with a strong technological component—automation, digital services, online gaming—may even see growth opportunities in new segments, which will also lead to an increased need for personnel.

What Is Our Forecast for the Coming Period?

However, if we refer to layoffs, data processed on behalf of our partners show that after June 1, these cases have been relatively few so far, with a continued preference for technical unemployment measures. Yet, a concerning situation noted was that employees with fixed-term contracts or those in probationary periods found themselves in the atypical situation where their individual employment contracts were not extended, as was common in the months before the pandemic.

It is true that monitoring the evolution of suspended employment contracts and those terminated according to data published by the Ministry of Labor and internal Smartree data shows a downward trend in suspended contracts alongside an increase in layoffs during May and June. It is clear that with the extension of restrictions for certain sectors and the general concern regarding the economic context, some employers found themselves in a position to resort to layoffs. Although this phenomenon was not acutely felt immediately after the state of emergency ended, we expect the number of layoffs in the upcoming period to become much more pronounced as state support measures are lifted and companies confront the new reality, such as significant declines in demand for products/services, bleak business forecasts, and a mismatch between business volumes and personnel structure.

Nevertheless, there are also companies, predominantly in the automotive sector, that have preferred, starting in June, to access the reimbursement of 41.5% of salaries for employees who had previously been placed on technical unemployment.