Duncan Brown: How will you treat employees in 2013?

Changing your reward policies next year? According to the latest research reports, half to two-thirds of you plan to do so, and the implications for employees are far from positive.

Analysing the four largest public sector pension plans, the Pensions Policy Institute’s October report The implications of the coalition government’s reforms for members of the public service pension schemes found the proposed reforms will reduce the average value of the benefit across all scheme members by one-third. No wonder they are out protesting.

Is this response typical? Will the climate in 2013 be any more conducive to making reward changes? The omens are not good. Despite the latest 1% quarterly GDP growth figure, November’s estimates from the National Institute of Economic and Social Research are that the economy will still contract by 0.1% this year, with a slow recovery of 1.1% in 2013.

The Commission on Living Standards says we face a decade of stagnation, with middle-income households forecast to have a disposable income in 2020, 3% lower than in 2008.

The Office for National Statistics’ latest quarterly figures show average net national income per person of £4,927, which is 13.2% below the pre-recession level four years ago. The same period.

Dr Andrew Lilico, director and principal at Europe Economics, speaking at Eversheds’ Labour Relations conference in October, raised the fear of spiralling price and wage inflation. And Aon Hewitt’s Salary increase survey 2012-13, published in August, showed UK wage rises moving up to a median 3.2%.

Perhaps unsurprisingly, an audience vote at Eversheds’ conference found 70% expected the employee relations climate next year to be more challenging, not helped by a raft of contentious employment plans from the coalition, most notably Chancellor George Osborne’s ludicrous idea for staff to trade employment rights for shares.

Only 14% of private sector employees are in trade unions, but, in my experience, negotiating major reward changes is often easier through recognised union structures. However, with Aon Hewitt’s database showing just 52% of Europe’s employees are engaged with their work, and less than one-third believing they are fairly paid, the task of re-engaging the workforce to deliver higher employer performance and national economic recovery looks formidable.

So what reward plans do you have for 2013? Will you be investing in your workforce, or risking cutting their pay and benefits?

Follow Duncan Brown on Twitter: @duncanbHR