Credit crunch pressures employers to award higher pay rises

Employers are feeling pressured to give large pay rises to help staff cope with rising costs caused by the credit crunch, a survey has found.

A report by Croner Reward in June into pay awards found the majority of employers awarded pay rises in line with the previous year, but almost a third gave less.

More than 40% of employers admitted to being under pressure to give higher pay rises than in 2007, with the same amount confirming pay awards this year had been higher. Surprisingly, the number that gave less than the previous year (30.4%) was almost the same as those that awarded the same as last year (29.7%).

Andrew Walker, business director at Croner Reward, said: “We are all experiencing a higher cost of living, and no-one wants to feel financially worse off year on year, so we expect pressure on employers to give their staff pay awards at least in line with inflation. Many private sector employers will themselves be feeling the pinch and will find it hard to divert already stretched financial resource into this area.”

The need to retain staff had the biggest influence on pay decisions, forcing employers to wait until later in the year to decide how much to award their workers.

The poll surveyed 149 employers with between 50 and 500 staff across the UK.

A survey last month found just 6.1% of pay awards were at the same level or higher than the Retail Prices Index inflation rate.

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