Gordon Brown last week called for restraint and ordered the Cabinet and all ministers to forgo their pay increases this year as part of government attempts to control public sector wages.
The move was intended to set an example to the nation, and was swiftly followed by the Chartered Institute of Personnel and Development's stark warning to employers to keep pay rises in check, or risk further economic slowdown and a sharp increase in unemployment.
As average wage rises edge down closer to 3%, employers should be focusing their energies on improving staff benefit choices to avoid a surge in pay rise requests as inflation-busting fuel and food bills take their toll.
The challenge for employers now, more than ever, is to move the focus away from base pay and re-evaluate and develop total reward schemes that improve the visibility of benefit choices. And there are signs that this is already happening in local government.
It's encouraging that some companies are really listening to what staff want, and it's often the non-financial benefits that are highly valued and can set them apart from their competitors.
Yet, even those of you that have gone all out to survey employees and introduce benefits to suit a range of lifestyles from wellbeing to carbon offsetting and retail vouchers are often guilty when it comes to communicating these benefits to staff. In fact, well over one-third of employers, in the Employee Rewards Watch 2008 research, admitted that their reward strategy was not valued by staff or was not well communicated.
It's not rocket science that only those with excellent communication schemes can expect healthy take-up rates and ultimately improve recruitment and retention.
Granted, it's time consuming, but educating and encouraging employees to become more interested in their total rewards package has to be a key priority, as there's no doubt that you will face increasing pressure to prove that reward spend is being properly directed.
