Employee retention could prove difficult as pay freezes continue

The latest monthly pay intelligence survey by IRS, published by XpertHR, has shown that the median pay award in the three months to January 2010 was zero per cent, down from 1.2 per cent in the previous quarter, heaping pressure on firms'' retention plans.

Once performance-based pay rises were included in the analysis, nearly half (48 per cent) of the 80 deals surveyed represented a freeze in pay, up from 34 per cent in the three months to December 2009.

It also showed that of the 62 pay awards that were surveyed in January 2009 and 2010 the vast majority (73 per cent) had dropped in value, 13 per cent were the same and 14 per cent had increased.

Sarah Welfare, XpertHR pay and benefits editor, said: "We are seeing a new round of pay freezes in 2010, with some employers freezing pay rates for the first time since the recession began.

"With headline inflation shooting up, this will inevitably put pressure on pay settlements as employees seek at least match pay increases to inflation. But so far employers seem to be resisting this pressure, faced with such uncertainty over the economic recovery." Back