CIPD survey shows pay freezes rose by 17% in 2009

The number of employees receiving a pay freeze has risen by 17% this year, according to the Chartered Institute of Personnel and Development’s (CIPD) annual pay survey.

The study of more than 2,500 employees, released today, reveals that 41% have seen a pay freeze, up from 24% last year, while 50% have received a pay rise (2008: 67%).

The state of the economy is by far the most common reason for pay freezes and cuts (71% and 72% respectively), followed by how much the organisation needs to spend. It is also the reason used by most organisations to explain changes in pay (57%).

More than three-quarters of public sector workers (76%) received a pay rise, compared to 40% in the private sector (2008: 64%). However, public sector workers are less satisfied with their pay rises (net satisfaction score +48%) than private sector workers (+69%).

Charles Cotton, reward adviser at the CIPD, said: “Employers in the private sector will be relieved to see that their employees are particularly understanding of the economic realities they face. Even pay freezes have not so far resulted in high levels of employee dissatisfaction.

“However, public sector employers will be worried that many of their employees are not satisfied with their inflation-busting pay rises in 2009. Given that pay freezes look like a reality for the public sector in 2010, it does not bode well.

“More must be done to manage pay expectations in that sector and shift the focus from pay to other forms of reward, if they are going to hold on to staff as the rest of the economy recovers.”

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