Pay restraint will continue into 2010 as the UK experiences “anaemic growth”, the CBI has predicted.
The Easing up? survey by the employer group and consultancy firm Harvey Nash, published today, has found just under half of employers plan to apply a pay freeze at their next review, while 20% intend to offer a pay rise in line with inflation.
Manufacturing and construction industries were the most likely to continue operating a pay freeze.
The survey of 234 businesses, employing more than half a million staff, also found the number of employers operating recruitment freezes had dropped sharply from 67% in April/May this year to 37%.
But this drop was caused by employers that had been operating partial hiring freezes in certain areas of their business lifting those freezes.
Almost a third of employers had partial freezes in place in April/May, and this has now fallen to only 10%.
But where employers were forced to implement a freeze across their whole business, the number of employment freezes dropped by only 3% to 27%.
John Cridland, deputy director-general of the CBI, said: “We are going to have at best anaemic growth, and anaemic growth is not going to lead to significant job growth, and it is not going to allow businesses to free up to any significant extent the pay restraint which has been a remarkable characteristic of this recession.
“2010 is going to be a year of further pay restraint, and that is the best way to protect the labour market and to protect jobs.”
The survey also revealed that half of companies had cut their graduate intake for 2009-10, while 31% were taking their usual number, and a fifth were actually increasing graduate intake.
Just under half of respondents also said they thought the UK was a less attractive place to invest and do business than it was five years ago.
Cridland said: “This is a fairly consistent pattern and I think we can correlate that with the relentless tide of new employment regulation, of which the Agency Workers Directive is the most marked.”
He told Personnel Today he supported the Conservatives’ pledge to ensure Britain could opt out of new employment regulations which were not in employers’ best interests.
The survey also revealed a marked increase in the use of teleworking, with two-thirds of companies now offering this to employees – up from 11% in 2004.
Meanwhile, Cridland warned the public sector could be hit by industrial action as the government starts to cut budgets.
He said: “With the realities that have lived within the private sector for the last year hitting the public sector, and the public sector needing to tighten its belt, we could well see more signs of challenge.”