Pay frozen at a quarter of organisations

Pay freeze

One employer in four (26%) has already frozen or will freeze pay this year and just under one in 10 (9%) has decided to delay pay reviews, according to the Chartered Institute of Personnel and Development’s (CIPD) annual reward survey.

However, the survey of 280 employers did offer some positive results. Some 65% of organisations have already increased, or are planning to increase, base pay this year. Pay cuts were found to be rare, with 99% not planning to cut pay.

When managing pay progression, the most common approach taken by employers is to link pay to indvidual performance, used at 61% of organisations, either on its own or combined with other factors.

Charles Cotton, performance and reward adviser at the CIPD, commented: “In the context of public sector spending cuts and cautious economic growth in parts of the private sector, it’s not surprising that not all organisations have been in a position to make a pay award this year.

“We expect that there will not be much change to the proportion of organisations making a pay award in 2012. This is again due to a public sector that doesn’t have much money to play around with as employers freeze pay, scrap bonus schemes and ask employees to pay more towards their pensions.”

He added that some private sector organisations will also find it hard to increase pay if this part of the economy does not grow as quickly as anticipated.

The CIPD also found that two-thirds (67%) of organisations are currently operating performance-related reward schemes. The most common forms of performance-linked rewards used by employers are merit-based pay rises (used by 56% of organisations) and individual bonuses (54%).

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