Business: The Crunch That Stole Christmas

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AS the annual crop of desktop evergreens and water cooler wreaths attest, Christmas permeates every branch of the workaday world. In this holiday season, however, office parties, business gifts, Christmas cards to customers and year end bonuses to employees are not as pervasive as in previous years. Caution about the economy, confusion over Phase 11, and a generally rising level of employee sophistication have combined to produce a crunch that is taking away those Christmas extras.

The policy on bonuses has not been fully defined by the Pay Board in Washington. In general, companies can grant the same size bonuses as in previous years. If a firm paid little or no bonus last year because business was bad, but had a record in prior years of giving a bonus, this year's payout would probably be permitted. Companies that seek to raise their bonuses are expected to adhere to the board's 5.5% limit on overall pay increases. Thus, whatever a company adds to its bonuses, it will have to subtract from its increases in wages and benefits in order to stay within the 5.5% limit.

In many firms, holiday bonuses are shrinking or disappearing altogether. Wall Street's brokerages, for example, are not all the generous year end Santas they were during the peaks of the mid 1960s. At the New York Stock Exchange itself, the 1969 bonus of nearly 10% of salary for almost all the exchange's 3,000 employees is down to 71% for the second year in a row.

Some companies that still make holiday payouts, like Los Angeles' Security Pacific National Bank, are turning to employee profit-sharing plans as a more rational way to spread good fortune around. But 1971 was not a particularly cheery profit year, and workers whose bonuses are tied to corporate earnings may find it a cruel Yule instead. At General Motors the bonus schedule has been redrawn to exclude employees earning less than $24,000, instead of $15,000 as in 1969. Last year, no bonuses were paid because of the lengthy United Auto Workers strike. One survey of 524 New York City area firms showed that not quite 37% will grant holiday payments this year v. more than 39% last year.