Opinion

As Travel Stagnates, Airlines Embrace Outplacement Benefits to Support Workers and Reduce Costs

The COVID-19 pandemic has devastated the travel industry, causing the U.S. unemployment rate in the sector to surge from a low of 5.7 percent in February 2020 to a peak of 39.3 percent in April. Federal relief helped U.S.-based airlines stay afloat for several months during the pandemic, but the aid was only available until Sept. 30, forcing airlines to lay off and furlough thousands of workers. This prompted Congress to approve yet another round of payroll assistance for major airlines in the hopes of keeping workers employed until at least March 31, 2021.

While federal aid has been much needed, airlines are quickly finding that, in lieu of additional aid, outplacement benefits can help support affected employees amid workforce shifts while also protecting their bottom line as they wait for travel to pick up in the year ahead.

Prior to the pandemic, the travel industry was booming, contributing approximately $2.6 trillion to the U.S. economy and $8.9 trillion to the global gross domestic product in 2019. But now, the travel sector is expected to report $1.2 trillion in economic losses as a result of the financial implications of the pandemic. Additionally, pre-pandemic, the leisure and hospitality industry accounted for 11 percent of employment in the United States and supported nearly 16 million American jobs, but travel restrictions and a plunge in demand for air travel due to coronavirus has resulted in the sector accounting for 36 percent of all job losses.

The U.S. Travel Association has noted that the impact of the pandemic on the travel industry is much worse than September 11 and the Great Depression, and the International Air Transport Association reported 2020 will be known as the worst year in aviation history. This led Congress to grant carriers $25 billion in cash and loans last year, on the condition that airlines delay layoffs until Sept. 30. When that deadline passed, airlines once again scrambled to lobby for additional support, which resulted in Congress approving $15 billion in payroll assistance in December.

It is estimated that without additional government assistance, more than 1 million airline jobs worldwide would have been in jeopardy — and that didn’t include the 3.5 million jobs across the aviation sector that could have been lost or the 46 million additional jobs in the broader global economy that are supported by aviation that were also at risk. While the $15 billion in payroll aid finally began to be distributed on Jan. 15, many airlines across the globe have had no choice but to implement layoffs, furloughs and buyouts, all while exploring alternative ways to support their employees while cutting costs, while they waited to receive their funds.

For example, United Airlines and American Airlines offered 20,000 employees the option of temporary unpaid leave, allowing them to continue receiving medical and other health benefits during the crisis, while Delta announced plans to invest approximately $3 billion to cover the costs of early retirement packages.

Given these workforce shifts, airlines are realizing that partnering with an outplacement services provider can help ease the transition following a necessary work separation and can support their departing employees who now must navigate a job search in the COVID-19 economy. Just recently, JetBlue partnered with Randstad RiseSmart to offer outplacement services to crewmembers who took voluntary opt-out packages in 2020.

Global air travel isn’t expected to return to pre-pandemic levels until at least 2024, a year later than initially predicted. Given the anticipated long road to recovery for the airline industry, employees may need to consider roles in other sectors, and top employers understand that providing outplacement, either on their own or through an outplacement solutions partner, can help these individuals make a successful career transition.

Offering outplacement services can help reduce unemployment tax charges and other costs related to reductions in workforce. Currently, U.S. employers pay a flat federal unemployment tax of 6 percent for the first $7,000 of each employee’s wage per year. According to a white paper by Randstad RiseSmart, the longer it takes for a laid-off employee to find and land a new job, the more the employer must pay per worker down the road. Providing separated employees with career transition services like coaching, resume writing and job sourcing through an outplacement provider help them land a new role much faster, which significantly reduces the amount of unemployment claims drawn down against a company.

Not only does outplacement support reduce costs for employers, but it also underlines a commitment to embracing corporate values and doing right by employees, which can discourage impacted employees from airing grievances on social platforms like LinkedIn and Glassdoor and in turn can have a long-lasting, positive effect on an organization’s employer brand. Supporting a positive exit experience can also encourage impacted individuals to return as boomerang employees once hiring picks back up down the road. And showing care for employees – even as they leave the organization – relays a dedication to delivering a great experience for both passengers and employees, which can boost positive brand perception and long-term loyalty.

While major airlines wait for travel to boom again, outplacement services can provide employees with short-term relief needed now that will reap long-term benefits. During a time when unemployment is at an all-time high and employees in the travel sector are facing the brunt of it, it’s important, especially as part of our global economic recovery, that employees are provided the resources needed to land a new job in this challenging job market.

 

Dan Davenport is the president and general manager at Randstad RiseSmart.

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