Pay freezes expected by 48% of organisations in 2009

Nearly half of organisations will freeze pay this year as the recession takes hold, research has shown.

A survey of 138 payroll managers by the Institute of Payroll Professionals (IPP), in partnership with Pay Magazine, showed 48% said they would freeze staff wages this year in response to the economic downturn, which has seen unemployment rise to nearly 2m. However, less than 1% expected to reduce salaries over the next six months, it found.

Lindsay Melvin, chief executive of the IPP, said the findings were positive. “The number of companies giving pay rises is a lot higher than the media would have you believe, especially with all the negative press about a growing number of workers willing to take pay cuts to avoid being made redundant.

“This is good news for employees who simply assume they won’t get an annual salary increase this year due to the recession.”

However, Sheila Attwood, editor of Personnel Today‘s sister organisation, pay specialists IRS, said as inflation falls and employers look to cut costs, employees may need to lower their expectations in 2009.

Of the 52% of employers who plan to increase staff salaries in 2009, according to the IPP survey, eight in 10 said they were raising pay by up to 4%. This has fallen by 0.6% from last year’s median weekly pay rise for full-time employees.

Yesterday, the Consumer Prices Index, the government’s preferred measure of inflation, showed inflation fell in January by 0.1% to 3% compared to December. The the retail price index measure of inflation, which is often used in pay negotiations, dropped from 0.9% in December to 0.1% in January.

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