Mercer: Three-quarters of employers are not planning to freeze pay in 2010

The Mercer report - based on responses from 41 organisations surveyed in September 2009 - finds:

[M]ost organisations considered or instituted some form of salary freeze in 2009 with 22% introducing a blanket freeze and 32% applying a freeze to specific employee groups such as executives.

But looking ahead to 2010, Mercer believe that things start to appear substantially more optimistic. More than three-quarters (76%) of those surveyed say they are not considering a pay freeze for 2010. In contrast, only 7% of respondents have already decided to freeze pay next year. The remaining 17% are considering freezing pay for some or all employees, but have not made a decision as yet.

IRS: Pay freezes dominate in 2009...

Latest annual analysis of whole economy pay trends (subscription required) from IRS also finds that pay freezes have dominated the reward scene during 2009. But they also look set to loom large in 2010.

Pay freezes comprise more than one-third (34.9%) of pay deals monitored by IRS researchers in 2008/2009.

Indeed, the IRS headline pay award collapsed to nil over the three months to 31 July 2009 according to latest revised data. And it has remained at this level for the two successive rolling quarters (which includes the first rolling quarter of the 2009/2010 bargaining round: the three months to 30 September 2009).

IRS pay specialist Rachel Sharp observes:

A new 'pay floor' has been established in the 2008/09 bargaining round, with the headline pay award standing at nil for the first time in the 25 years since IRS began collecting data.

...but pay awards will show signs of life in 2010

The latest IRS analysis of pay prospects for the coming year (subscription required) finds that private sector pay awards may pick up to some extent if the anticipated economic upturn gathers pace.

Pay freezes are likely to remain a feature of private sector pay for some time, with more than one-quarter (27.3%) of pay groups unlikely to receive a pay rise over the coming year. But pay freezes may no longer be the dominant award. Overall, private sector employers forecast a median pay award of 2% for 2009/2010.

But public sector pay awards for 2009/2010 are a different matter entirely. No matter who wins the 2010 general election, swingeing cuts in public spending are on the cards, with public sector pay freezes seemingly inevitable.

Pay freezes could yet remain a significant feature of the reward landscape into 2010 and beyond.

• 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.