–Wider Economic Challenges, Pension Costs Seen Capping Pay
–Survey Suggests BOE MPC Angst On Pay Drift May Prove Premature

LONDON (MNI) – UK private sector employers forecast pay rises will
remain subdued in the year ahead, with pay freezes and redundancies
prevalent but most employees expecting a pay hike, according to the
latest survey from XpertHR.

The median pay rise forecast for the private sector is 2%. XpertHR
noted that the forecast figure is lower than its current median pay
award of 2.6% for the three months to end February and said
organisations may be wary of committing to higher pay rises and may feel
burdened by pension changes.

Minutes of the Bank of England Monetary Policy Committee meeting
for March released Wednesday showed members citing “some signs” of
upward drift in pay deals. Concerns that this trend may continue may
prove premature if this survey is anything to go by.

“The slow economic recovery is continuing to influence
organisations, with pay freezes and redundancies forecast by some, but a
pay rise is on the cards for most employees,” XpertHR said.

XpertHR said that half of all organisations surveyed expect to
award rises worth between 2% and 3%, with employers in the manufacturing
and production sector forecasting a pay rise of 2.5% over the next year,
compared with a 2% forecast from private sector services firms.

Only 9.9% of organisations expect to give an award worth more than
2012’s RPI forecast of 3.2%.

Approximately half (48.3%) of the organisations surveyed expected
some alteration to other employee terms and conditions, with 34.4%
expecting to make some redundancies and a quarter expecting to review
their benefits.

Just under a quarter (23.2%) of respondents said that pension costs
generally would be a downward influence on pay awards and 17.5% said
pension costs due to the introduction of auto-enrolment are likely to
restrain pay.

The survey also found that employers don’t feel under pressure to
make up for several years of low/zero pay rises – only 16.6% of
organisations think the 2012 pay deal needs to makes up for previous low
awards.

Additionally, more than three-quarters (76.4%) of organisations
feel that employees have accepted the need for pay restraint and says
that this may reflect the fact that organisations have ‘stuck together’,
keeping in-line with competitors in terms of rates of pay.

“Although we might expect employees to be tiring of low pay rises
or pay freezes, our survey respondents indicate that to date they have
understood about the economic challenges that organisations face.
However, a median 2% increase during 2012 will result in another of year
of below-inflation pay rises.”

The survey suggests that employers will be under increased pressure
in 2012 to constrain pay awards.

–London newsroom: 0044-7862-7492 email: dthomas@marketnews.com

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