Employers try to avoid pay freezes

UK employers are responding to the difficult economic climate by trying to avoid freezing employees’ pay and focusing on staff retention, according to research by Aon Hewitt.

Its 2012/2013 Global salary planning report found that, in 2012, private sector salary budgets increased at a rate of 3.2%, the same rate as 2011. However, with the inflation rate remaining at 2.9% in 2012, down from 4.5% in 2011, the result was a rise in spending power for employees.

Andrew Macleod, leader of Aon Hewitt’s pay research practice in Europe, Middle East and Africa (EMEA), said: “At a time when organisations are understandably looking to reduce their operational costs, it is good to note that we are not seeing austerity measures such as pay freezes that directly hit the income of employees.

“By contrast, we have seen a steady commitment by private sector employers to rewarding and retaining their staff throughout the ongoing economic turmoil.”

The report also estimated that salary budgets are expected to remain at 3.2% next year, with inflation projected to be at 2.8% for 2013.