One in five companies hit workers with pay freeze

In a typical year, only one in 20 employers freeze remuneration - but Covid-19 has tightened the purse strings

pay freeze for one in five companies

Workers are bearing the economic cost of the Covid crisis with one-fifth of companies imposing pay freezes in the three months to October despite the resurgence in GDP growth as industries reopened.

In a typical year, around one in 20 workforces would find their pay packets unchanged, according to data from XpertHR, underlining the dramatic force of the pandemic on wages.

On average, pay rises still came in at 2pc, down from the 2.5pc offered in 2018 and in 2019.

Just over half of those who received a pay rise found it was smaller than the award given a year earlier.

Nonetheless, pay rises during the pandemic show that bosses are stretching to reward staff performance in a tough year, offering a raise in excess of prices which are up 0.7pc on the year. The median increase is still higher than the typical rate of 1.9pc which employees were granted in 2016.

“So far this year around one-fifth of all pay reviews have resulted in no movement in pay for employees,” said Sheila Attwood at XpertHR.

“While a desire to save jobs is a focus for some, others are struggling with the funds to recognise the very employees who have kept their businesses going through the pandemic.

“With a second national lockdown now in place, organisations need to look out for their workforce and keep them motivated, ready for when the economic recovery happens.”

It comes at a time of rising unemployment despite the furlough scheme, which has helped sustain jobs during a record economic downturn.

Unemployment has risen by 260,000 from February to September, according to the Office for National Statistics.

Meanwhile the Recruitment and Employment Confederation has reported a surge in job seekers for a reduced number of vacancies, pushing down starting salaries as employers no longer have to compete hard to hire workers.