Businesses lift pay and recruitment freezes

The number of companies operating recruitment freezes dropped by 54% and pay freezes fell by 41% as businesses started to recover from the recession.

A survey, Gearing up for Growth, by the CBI and recruitment consultancy Harvey Nash, found that just 7% of employers halted recruitment this autumn, compared to 61% in spring 2009.

Similarly, the amount of companies operating pay freezes fell to 14% from 55% last year.

However, public sector employers are planning to increase their use of these cost-cutting measures as the Government implements budget cuts to reduce the deficit.

One-fifth of public sector organisations plan recruitment freezes in the next six months and 58% intend to halt pay rises.

John Cridland, CBI deputy director-general, commented: “Firms are cautious about recruitment and pay, given the fragility of the economy. But they know they can’t afford to take staff for granted, and must redouble efforts to keep employees on board as they gear up for growth.”

Despite the move back to recruitment, companies are still careful about their hiring procedures. A quarter (23%) plan targeted recruitment in areas such as management, technical roles and sales, and one-fifth (21%) intend to add staff to some parts of the business and reduce them elsewhere.

Albert Ellis, chief executive of Harvey Nash, added: “While business confidence in the sustainability of the recovery remains fragile, employers will not be recruiting on a broad scale. However, many organisations are taking a targeted approach to hiring talent to support their growth strategy and exploit opportunities where market conditions are supportive.”

The CBI and Harvey Nash research surveyed 330 employers from businesses of all sizes and sectors across the UK.