According to Harvey Nash and the CBI, half of British companies are intending to freeze pay in an attempt to hold on to employees.The joint report has revealed some of the  weaknesses and strengths in the economic recovery. John Cridland, who is deputy director general of the CBI, has recommended that the public sector should also follow the private sector into pay restraints due to the state of public finances.

Public sector jobs will be prioritised in 2010 to focus on maintaining front-line services with the knife being held above back office jobs as the government begins to cut public services.

A recruitment freeze has dampened the news that there has been a reduction in the amount of companies applying a pay freeze since the spring.

An interesting statistic was revealed about how the bonus culture is still alive and well and how it may be an important part of incentivising company performance of staff during the downturn. With bonus performance being more important than annual pay rises in this economic climate in which companies are battling to survive.

The CBI also predicts unemployment to continue to rise next year to just bellow the 3 million mark, but has revised its position because unemployment has risen far less than was initially predicted. However student graduates have been hit very hard by the recession with 50% of companies cutting the number of graduate opportunities.

Pay freezes may well be one of the main reasons that unemployment has been less vigorous than previously predicted as employers hang onto workers by freezing or cutting pay and fighting their way through this recession with maximum cost cutting.

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