CBI/Harvey Nash research: Pay freezes are decreasing

The proportion of UK employers freezing pay has declined, according to research by Confederation of British Industry (CBI) and Harvey Nash.

Staying the Course, the CBI/Harvey Nash employment trends survey, found that, among private sector organisations, only one in eight (12%) respondents plan to freeze pay at their next review.

The figure rises to 33% among firms that employ more than 50 employees, and decreases to 5% for organisations with over 5,000 staff.

The survey, which covers 462 UK organisations and was conducted between August and September 2011, also found that in the public sector, 14% intend to apply a general pay freeze.

Almost half (49%) of respondents are planning a general increase below the rate of inflation or targeted increases for some members of staff only.

In describing their intended approaches to pay at the next review:

  • 26% are planning a general increase below the level of retail prices index (RPI) inflation.
  • 23% are planning to target pay increases on only some employees.
  • 33% are planning to offer employees increases that at least match the level of RPI inflation.

Katja Hall, chief policy director at CBI, said: “Employers expect to raise pay modestly over the next year. The research found that the number of pay freezes is falling.

“However, there is a wide variation when it comes to company size, small firms are still finding it hard to award pay increases.”

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