Job market to stay dismal despite bits of hope

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NEW YORK (CNNMoney.com) -- The job market, still the worst in decades, may become a tad less chilly in the months ahead as a majority of employers now think the economy is inching towards a recovery, according to a survey released Monday.

The survey, by consulting firm Watson Wyatt, found that 62% of employers are planning to reverse hiring freezes over the next 12 months. It also showed that 69% of companies in the survey plan to eliminate salary freezes.

The results reflect a growing sense of optimism about the U.S. economy, which has shown some signs of stabilization after being mired in one of the longest recessions on record.

Despite the improved outlook, however, the survey also revealed that employers may keep some cost-cutting measures in place, suggesting the impact of the economic crisis may linger for years to come.

"While more employers now feel the worst of the current downturn may be behind them, most are not expecting to go back to 'business as usual'," said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt, in a written statement.

In other words, don't expect a major hiring spree anytime soon.

Even as employers scale back hiring freezes, more than half of the companies in the survey indicated that they expect staff sizes to be below "pre-economic crisis levels" over the next few years.

In addition to having fewer workers on staff, nearly 80% of bosses expect their employees to work past their retirement age, according to the survey.

While postponing retirement may become more common, help may return in paying for it. The survey showed that nearly half of employers that had reduced 401(k) and 403(b) matching funds said they plan to reinstate them over the next 12 months.

However, the benefits of matching retirement savings may be offset by a rise in health care costs. The survey showed 73% of companies expect an increase in the percentage of health care costs paid by employees.

"The challenge for companies will be to determine which cost-cutting changes can be reversed and which will become ingrained into the permanent business environment," Sejen said.

The survey was conducted in early June 2009 and included responses from 179 employers.

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