Healthy pay rises predicted for 2009 despite recession fears

Firms are predicting healthy pay rises next year despite the threat of recession, according to research published today.

The poll of 540 private sector employers by pay specialist Industrial Relations Services (IRS) found that the median forecasted pay rise for 2009 was 3.5%.

Although below the level of inflation – measured at 5% on the Retail Price Index in September – this would be similar to the level of pay rises in 2008. Eight in 10 employees can expect a pay rise next year that matches or exceeds that received this year, according to the poll.

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Manufacturers predicted the highest pay rises, in the region of 4%. In the services sector, employers forecasted closer to 3%.

IRS Pay and Benefits editor Sheila Attwood said: “Private sector employers do not seem to have been hit by the full force of recession in the UK just yet. By forecasting 2009 pay rises at 3.5%, they are demonstrating a significant optimism not being played out in the media.”