Pay freezes ‘becoming the new norm’

In order for businesses to remain competitive in the UK, pay freezes and weak wage rises are likely to become the “new norm”, according to experts from the CBI.

Figures from the business group suggest that in the coming 12 months, around half of the country’s firms will only offer below-inflation wage rises to their staff members. Meanwhile, a further fifth of firms intend to introduce pay freezes.

Among its other findings, the CBI study showed that two thirds of the companies polled believe labour market competitiveness is threatened by employment regulations to the greatest extent.

Recruitment agency temps have been cut back on by nearly half of respondents because of the implementation of the agency workers’ regulations, the organisation’s figures also indicated. John Cridland, CBI director-general, said more targeted action needs to be taken by UK ministers in order to support young people who are without jobs.

Elsewhere, the employment tribunal system is the single biggest deterrent to firms looking to hire, with a 58pc increase in claims over the past five years, the CBI warned.

IBB’s Employment Team provides advice on the employment aspects of all major business decisions. To contact a member of the team for advice, call us on 01895 207892 or email employment@ibblaw.co.uk.