Pay rises set to shrink during the recession

The size of an average pay rise will shrink in 2009 as employers try to keep a tighter reign on pay awards during the recession.
According to research released by Labour Market Outlook (LMO), one in eight employers do not plan to make any pay increase at all this year as part of efforts to cut costs and protect jobs.
For those employers who do plan to carry out pay reviews, they expect salary to increase by an average 2.6%, compared to the 3.5% expected last autumn.
The survey of 892 UK employers, conducted by Ipsos Mori at the beginning of January, also showed that 36% of respondents plan to cut jobs in the first quarter of 2009.
Andrew Smith, chief economist at KPMG, said: “The speed of deterioration in the labour market is breath taking.”