Half UK companies are planning pay freeze, says CBI

Nov 17 2009 by Iain Laing, The Journal

HALF of all UK companies are planning a pay freeze as the ailing economy inches towards recovery, according to a CBI report.

The study by the CBI and recruitment firm Harvey Nash found just 4% of respondents intend to give staff an inflation-busting pay rise.

While recruitment freezes are beginning to ease, companies wary over prospects next year are still reining in pay, the CBI said.

“Market conditions continue to be very tough and growth in 2010 is going to be feeble, so pay is going to be squeezed for some time to come,” deputy director-general John Cridland said.

The survey gathered data from 243 organisations across the private and public sector, employing more than half a million people in total.

The CBI also wants public sector workers to feel the pay hardship endured by private sector staff throughout the recession so far.

The organisation said private sector firms had “adapted to new economic realities“ with flexible working and pay freezes to protect jobs.

Although unemployment has reached 2.46 million so far, this is lower than first feared as workers give ground on pay and hours to avoid even more savage cutbacks.

“Given the alarming state of the public finances, we must see similar pay restraint in the public sector,” Mr Cridland added.