Tax & Accounting News

Employers plan to freeze pay

06/07/2009

Over half of all employers are planning to keep wages on hold during their next round of pay talks, according to figures from the Confederation of British Industry (CBI).

The CBI’s latest labour market survey revealed 55 per cent of respondents intended to peg wages at their current levels as a way of dealing with the recession, while four per cent planned to introduce pay cuts.

In addition, 30 per cent of employers had completely stopped taking on new staff, while 31 per cent had imposed a partial halt to recruitment. However, many firms are making efforts to avoid redundancies, for example by introducing flexible working, with 45 per cent of employers choosing that option. Cutting paid overtime has helped reduce costs for 43 per cent of employers, while 33 per cent have cut their use of agency staff.

Nine out of ten firms said they would not be altering their redundancy packages because of the recession, and almost half (47 per cent) are maintaining their training budgets – although nearly as many (44 per cent) are looking to reduce what they spend on staff development.

Most employers (87 per cent) called on the government to do more to improve the liquidity of the credit markets, while two-thirds wanted a moratorium on new employment regulation until the economy recovers.

John Cridland, CBI Deputy Director-General, said: "This has been a particularly bruising recession, but one of its most positive and striking aspects has been the commitment of many businesses and their staff to work together to try to trim costs and save jobs.

"The UK's flexible labour market has proved a huge asset during these testing times, and flexible working changes have enabled employers and staff to create leeway on working hours.

"While pay and recruitment freezes should disappear as the economy recovers, the spirit of flexibility and the willingness of many staff to engage positively with employers on these issues will hopefully be a more permanent benefit of the UK economy."