Two-fifths of businesses in service sector plan to freeze pay in 2012 - Croner

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Two-fifths of businesses in service sector plan to freeze pay in 2012 - Croner

A new survey by Croner reveals that 43% of businesses in the private service sector are planning to implement a pay freeze this year.

Viv Copeland, Head of Reward at Croner, said: "We have found that company affordability is the most important factor when an organisation decides on its 2012 pay award. Individual performance and the ability to attract and retain the right calibre of staff are also very important, which probably explains why 11% of organisations are looking to move away from an annual across-the-board award to individual performance awards.”

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Key survey findings

The survey of 100 organisations across Britain found:

• Private sector employees lucky enough to receive a pay rise can expect to get between 2% and 3%.
• The majority of manufacturing organisations plan to give pay increases of between 2% and 4%.
• A quarter of organisations say their pay award for 2012 will be higher than in 2011, rising to 36% in the voluntary sector.
• Almost half of private service sector firms say their pay award will be less than last year.
• Around one in five organisations who have had a pay freeze in the past are considering compensating staff with a one-off bonus, either this year or when they can afford it.
• Around 9% have decided to pay a non-consolidated bonus for one year only instead of the usual consolidated pay award.

A final word

"Employees will find this news hard to take, particularly with inflation now at 3%. The majority of employers are well aware that sustained pay freezes will not motivate or retain staff. What many are struggling with is what they can do within their budget to reward and retain hard-working employees, a challenge that is set to stay for the foreseeable future." - Viv Copeland, Head of Reward, Croner.

Want to know more?

Croner, a part of Wolters Kluwer, is the “UK's largest provider of workplace information, software and services”. It has served HR, health and safety and business professionals since 1948. To find out more visit www.cronersolutions.co.uk.