The number of pay freezes has risen, according to research conducted by the Confederation of British Industry (CBI).
Navigating Choppy Waters, the CBI/Harvey Nash Employment Trends Survey, which polled 335 UK employers, shows that pay freezes are up from 14% in October 2010 to 23%.
In the private sector, the proportion of pay freezes remained unchanged at 16%, while in the public sector 83% of organisations are operating pay freezes.
With pay restraint the norm, 31% of firms are planning a general increase below the retail price index (RPI); 17% are planning targeted increases for some staff only; 20% are planning a general increase in line with RPI and 4% an above-inflation award.
The survey also found that 57% of employers thought that unrealistic expectations for reward packages could be a barrier to hiring employees from the public sector.
John Cridland, director-general at the CBI, said: “The pay and recruitment freezes that were commonplace in the private sector during the depths of the recession have now migrated to the public sector. However, we remain confident that private sector growth can more than compensate for job losses in the public sector.
“With the recovery in its early stages and inflationary pressures a worry, employers are having to take tough decisions on pay. Only a quarter of employers can afford to make an award in line with inflation.
“Most are trying to strike a fair balance by offering either modest awards or targeting pay rises on essential staff. As a result, we are seeing very little in the way of wage inflation in the economy.”
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