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November 16, 2009    

Half of UK employers proposing to freeze pay

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by Kay Murchie

A survey by the Confederation of British Industry (CBI) and recruitment consultancy Harvey Nash, has discovered that more than half (55%) of British companies are proposing to freeze pay for the second consecutive year.

Furthermore, the survey found that just over one third are planning a modest increase, while just 4% were looking to increase pay by more than the inflation rate.

It appears that the annual pay rise is no more as the rise in unemployment due to the recession has led to severe cuts in many companies.

Commenting on the findings of the survey, John Cridland, the CBI’s deputy director general, comments: “Market conditions continue to be tough and growth in 2010 will be feeble, so pay is going to be squeezed for some time to come.

“As unemployment has risen, businesses and staff across the country have had to adapt to new economic realities. Pay cuts to preserve jobs are part of that reality,” added Mr Cridland.

The survey, which questioned 240 employers, also found that almost half of employers had reduced paid overtime and 26% had cut back on shifts.

In related news, last week the Office for National Statistics revealed that UK unemployment fell to 2.46 million in the three months to September - below the 2.47 million recorded in the three months to August.

Unemployment had been expected to rise to a 15-year high of 2.5 million and the figures were a welcome boost to the economy, which failed to emerge from recession in the third quarter.

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