Employers still cautious about pay rises

Many employers are still operating a cautious approach to pay, with only 3% planning to make an above-inflation pay award, according to a new report from the Confederation of British Industry (CBI) and Harvey Nash.

Picking up the pace: the CBI/Harvey Nash employment trends survey 2010 showed that after months of pay freezes and changes to working patterns, employers in the private sector still face the challenge of controlling labour costs.

The report revealed just 3% of employers are planning to make an above-inflation pay award, 29% are planning a rise in line with Retail Price Index (RPI) inflation and 20% a general increase below RPI.

However, the number of employers which reported they planned to freeze pay at their next pay review dropped from 47% six months ago to 16%.

John Cridland, CBI deputy director-general, said: “Employers have come out the other side of the recession, having managed to keep many more people in jobs than had been expected.

“This has been largely down to the flexibility and goodwill of staff who quickly adapted to emergency measures, including pay and recruitment freezes. Good communication played a key role in helping employees understand the changes needed to safeguard jobs.

“Although there are some signs that job prospects are improving, a good number of businesses are still operating a pay freeze. Those that can afford it are planning modest or targeted pay rises.”

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