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Half UK companies planning pay freeze

Half of all UK companies are planning a pay freeze as the ailing economy inches towards recovery, a survey has warned.

The study by the CBI business group 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.

The Conservatives plan a one-year pay freeze for all but the lowest-paid public sector workers if they win power next year.

The survey also found that half of employers had cut the number of graduate opportunities, while nearly half - 49% - think the UK is a less attractive place to do business than five years ago.

This was posted in Bdaily's Members' News section by Ruth Mitchell .