One in three UK firms impose pay freeze

According to research published by Incomes Data Services (IDS), one in three UK firms has imposed a pay freeze on its workers this year.

The areas in which pay freezes are most common are the motor industry, construction, chemicals, road and air transport and the media. Employees in energy, pharmaceuticals, bus and rail transport, food production and finance are more likely to have been awarded pay awards this year. If you’re one of the lucky ones to have received a pay increase, on average you will have received 2.9%

The report states that "In many cases pay freezes have been justified through commitments to safeguard jobs. Firms are conscious of the need to retain a skilled workforce for when the market picks up"

If inflation rises as economists predict, IDS say that there will be an upward pressure on pay, with most private sector increases in the 2.5% to 3% range. The report also warns that unemployment may remain high but if the economy recovers, skills shortages will soon re-emerge.

• What are the reasons why employees in the motor industry, construction, chemicals etc. are least likely to have received a pay award this year?
• Further research: some organisations have even persuaded employees to accept a pay cut this year. Which well-know companies have done this?
• Some companies are attempting to retain their skilled workers for when the market picks up. Is this more difficult for smaller organisations?
• Explain why unemployment can be high, but at the same time companies may be experiencing skills shortages.