More than one-third (35%) of UK employers are planning to freeze pay or postpone pay rises, according to research by Willis Towers Watson.
Its survey of 15,000 employees across 132 countries also found that under two-fifths (39%) have already decided to reduce annual bonuses.
In addition, the findings revealed that one-fifth (19%) of businesses have reduced the size of their workforce due to the financial pandemics of the Covid-19 (Coronavirus) pandemic, 37% are planning to so, or are considering pay cuts. Additionally, almost two-thirds (60%) of employers have implemented or are considering unpaid leave policies that are either voluntary or mandatory.
However, the survey also found that UK employers expect to see their pay budgets return to normal levels in 2021. However, the number of organisations planning on pay freezes is now 12%, compared to 2% the year before.
In the United States, pre- and post-Coronavirus pay rises are expected to remain steady at 3% in 2020 and continue at the same level until 2021. Employees in Canada have cut pay budgets by 0.1% this year, with an expected 3% recovery in 2021.
In Europe, employers in the UK, France and Germany are anticipating pay budgets for 2021 will be lower than their planned budgets before Coronavirus.
Keith Coull, senior director at Willis Towers Watson’s Global Data Services business, said: “It’s no surprise to see that many businesses are reducing their pay budgets this year. Most organisations around the world are in cash preservation and cost optimisation mode and 80% of organisations in the biggest economies have already implemented a hiring freeze.
“The full extent of the economic impact of the pandemic is yet to play out as some companies froze pay this year to shore up cash flows, whereas others had already announced pay rises before the pandemic hit, so may feel more of an impact next year.”