Surveys highlight impact of recession on pay

Research published in May and June 2009 by the pay monitoring body Incomes Data Services and the ‘Keep Britain working’ campaign suggest that over a quarter of pay deals in 2009 have resulted in pay freezes for the employees concerned. This affects a much higher proportion of employees than in 2008. Moreover, the research reveals that more than half of UK workers have experienced a cut in pay or working hours or a loss of benefits since the recession began.

Pay freezes increase

Research published by the pay monitoring body Incomes Data Services (IDS) has shown that one impact of the recession on pay decisions in 2009 has been the growing incidence of pay freezes (0% pay settlements). In May 2009, the IDS Pay Report highlighted a significant increase in the proportion of company pay reviews that have resulted in pay freezes. IDS reported that, of 243 pay deals monitored so far in 2009, some 64 – or just over a quarter – were pay freezes, compared with only seven pay freezes reported in the whole of 2008.

The incidence of pay freezes reportedly varied between economic sectors, with engineering – particularly vehicles and components – and chemicals manufacturing accounting for two fifths of all pay freezes. A number of pay freezes have also been implemented in sectors such as financial services, media, and air and road transport.

Organisations in which there have been 0% pay settlements include the construction and agricultural equipment manufacturer JCB, the engine manufacturer Cummins, the National Society for the Prevention of Cruelty to Children (NSPCC) and, from November 2009, Jaguar Cars. In some cases, there have been pay freezes for higher paid groups of employees, but not for others. For example, the British Broadcasting Corporation (BBC) has frozen pay for senior executives while the bulk of staff are due to receive a ‘modest’ pay rise for 2009. Similarly, the Pearson media group has frozen the pay of all staff earning over GBP 30,000 a year (€35,180 as at 12 June 2009) while lower paid staff will receive a 3.5% pay increase. In some cases, companies have frozen pay scales but have continued to pay progression increases, as at the insurance company AXA Sun Life and the Nissan motor company, while others – such as the Toyota motor company – have frozen basic pay but have continued to pay bonuses.

According to IDS figures, the rising proportion of pay freezes contributed to a fall in the median level of pay settlements from 3.4% to 3% in the three months to the end of March 2009. However, the interquartile range of 2% to 3.8% indicates that, despite an increase in pay freezes and low pay settlements, there is still a wide range of pay settlement levels, with a quarter of all pay deals being at 3.8% or above.

Cuts in pay and working hours

On 1 June 2009, a survey of over 1,600 workers published by the Keep Britain working campaign suggested that more than half of UK workers (54%) have experienced a cut in pay, a reduction in working hours or a loss of benefits since the recession began.

According to the survey, over the past nine months:

  • 27% of UK workers have had their pay cut;
  • 24% have had their working hours reduced;
  • 24% have lost benefits.

While 37% of UK workers had experienced just one of these changes, 12% had experienced two of them and 5% had experienced all three.

These figures followed a vote by workers at the Honda motor company’s Swindon plant in May 2009 to accept a 3% pay reduction for the next 10 months to protect 490 jobs.

The survey also found that 40% of workers had been given extra responsibilities, while 20% had experienced a change in role within the same organisation. Some 2% had been offered a semi-paid sabbatical, while 6% had been offered an unpaid sabbatical since the recession began.

More than half the workers in the survey were more pessimistic about job prospects in June than a month previously: 54% said that they were more pessimistic while 17% were more optimistic.

Keep Britain working campaign

The campaign ‘Keep Britain working’ was initiated by the Reed recruitment group and has received the endorsement of leading politicians from the three main political parties, the Trades Union Congress (TUC) and the British Chambers of Commerce (BCC). Its aim is to help preserve as many jobs as possible and to help create new ones by promoting innovative ways to keep people working.

The campaign group argued that its survey ‘demonstrates just how flexible the British workforce as a whole has been and how changing working terms has helped organisations avoid even greater job cuts [...] The UK workforce has demonstrated unprecedented flexibility during this recession.’

Mark Hall, IRRU, University of Warwick

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