Equal numbers of public and private sector employers have frozen pay during the economic downturn, according to the latest Chartered Institute of Personnel and Development (CIPD)/KPMG Labour Market Outlook (LMO) survey.
The report reveals that that one in five public sector employers have frozen pay awards for the time being, the same amount being seen among private sector organisations.
A further 6% of public sector employers are deferring pay decisions until later in the year, only slightly fewer than the 10% of private sector employers making deferrals.
Employers on balance expect pay increases in 2010 to be lower than this year in the next 12 months.
The CIPD said the results reflect ongoing weakness in the labour market, with unemployment expected to rise well into 2010, and the impact of low inflation, especially on the Retail Prices Index (RPI) measure,which is most commonly used as a ‘cost of living’ benchmark in pay settlements. Official inflation figures released today have shown that inflation is -1.4% on the RPI measure.
Charles Cotton, reward adviser at the CIPD, said: “With unemployment rising and spare capacity in the economy bearing down on inflation it was always likely that, sooner or later, the big pay chill would spread into the public sector.
“Today’s official figures confirm that inflation remains in negative territory, which will effectively mean a rise in workers’ real living standards even if you are subject to a pay freeze. However, this will be cold comfort for those who hoped the green shoots of economic recovery would signal the onset of a sunnier economic climate.”