Employers set to keep squeezing pay

Employers who did not offer their staff pay increases during 2009 are likely to continue to freeze salaries for the rest of this year, analysis published today reveals.

The Labour Research Department (LRD), an independent consultancy that conducts research on behalf of trades unions, said that many workers would face a pay freeze for the second year running over the next 12 months, despite Britain's economy moving into recovery. and signs that inflation is now beginning to return.

Pay freezes were actually now more common than at any time during the recession, the LRD said, with January having seen a marked toughening in the attitude of employers.

About one-third of all pay settlements currently see no increase for staff; this figure rises to 51 per cent if deals negotiated on a multi-year basis are stripped out. Half of all those staff who have not secured a previous commitment from an employer for a pay rise are missing out. The consultancy said it had already seen a string of firms announce pay freezes for 2010, including Hanson Building Products, Nissan and the motor parts manufacturer Stadco Powys. All have extended pay freezes introduced last year.

Negotiators working on behalf of trades unions are extremely downbeat about the prospect of securing more pay for members this year, the LRD said. Three-quarters of union representatives in the public sector, and half of those in the private sector, expect 2010 to be tougher than 2009.