Basic pay awards have fallen to 3% in the three months to the end of January 2009, according research by Industrial Relations Services (IRS).
There has also seen a sharp rise in the number of pay freezes and the deferral of pay rises, according to Personnel Today’s sister organisation, pay specialist IRS. One in four pay awards effective in January 2009 has resulted in a 12-month pay freeze.
IRS Pay and Benefits editor, Sheila Attwood, said: “A focus on January 2009 pay settlements confirms the view that a combination of lower pay awards and pay freezes is in prospect as the new year unfolds. Retail Price Index (RPI) inflation is expected to continue falling, putting further pressure on the level of pay rises.”
With RPI at just 0.1% in January 2009, there is a strong likelihood of this number increasing, IRS said.
More than half (52%) of the pay deals in the IRS sample are set lower than the year before, while just over one-third (34%) are set higher.
Earlier this week, a survey of 138 payroll managers by the Institute of Payroll Professionals, in partnership with Pay Magazine, showed 48% of businesses said they would freeze staff wages this year. However, less than 1% expected to reduce salaries over the next six months.