Majority of UK employers plan to freeze or cut pay in 2009, says BCC

More than two-thirds (70%) of UK employers plan to freeze or cut salaries during 2009 (external website), according to latest research from the British Chambers of Commerce (BCC).

The latest Monthly Business Survey from the BCC, which monitors the views of 400 UK employers surveyed between 23 March and 6 April 2009, finds that almost three-fifths (58%) are planning a pay freeze in 2009. A further one in eight (12%) is planning to cut wages.

And the bleak tidings don’t end there: half (50%) of respondents say they are either considering or are certain to make redundancies over the next six months.

BCC director general David Frost emphasises that this survey focuses on the private sector, which in his opinion has been hardest hit by the economic downturn. According to Frost: “It is the country’s private sector that has faced all the pain of this recession. The results of our most recent poll shows just how hard times are.”

The BCC survey is forward-focused, looking at respondents’ expectations for the coming six months. The latest monthly analysis of whole economy pay trends from IRS – newly published to XpertHR – records an overall lower trend in pay awards (subscription required) in the three months to 31 March 2009. Key findings include the following:

  • the headline pay award stands at 2.8% in the three months to 31 March 2009, down from 3.5% one year previously;
  • nearly three-fifths (58%) of pay awards are set lower than a year ago; and
  • one in four pay reviews in our sample has resulted in a pay freeze.

Our next monthly analysis – to be published to the XpertHR Pay and Benefits homepage on Friday 29 May 2009 – will include a detailed look at the all-important April 2009 pay bargaining round. This will provide a crucial indicator of the direction of pay awards for the remainder of 2009, and will look at the number of confirmed pay freezes and pay cuts. 

  • Has your organisation recently carried out an annual pay review? If so, and if it has now been settled, please get in touch so that we can add your organisation’s pay award to the IRS database.

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