Almost a third (31%) of employers admit they will be changing pay structures this year, according to the British Chambers of Commerce (BCC), with 43% planning to freeze wages, 9% intending to cut them and 38% admitting pay rises will be smaller than in 2008.
In light of the expected 'annus horribilis' of 2009, the BCC has gone as far as to advise that the National Minimum Wage should not be increased, to save UK business £300 million.
Steve Hughes, economic policy adviser at the BCC, says: "The economic circumstances mean a large decrease in (business) output. Credit is being squeezed and cash flow is a problem for employers. Staff may have to be got rid of if employers cannot afford to increase pay costs - so this can be mitigated by keeping the minimum wage the same."
The National Minimum Wage currently stands at £5.73 for employees aged 22 or over, but the Trades Union Congress (TUC) is campaigning for it to be increased to £6.10 by October this year.
Paul Seller, pay adviser at the TUC, argues: "The organisations who are calling for a freeze to the minimum wage are giving their staff above minimum wage pay. It's a case of 'Do as I say, not as I do'. I don't think that pay freezes will be the norm (this year). But I do think setting a too low minimum wage will have detrimental side effects - staff will not be motivated."
Either way employees are pragmatic about 2009's pay outlook. According to the CIPD, 28% of employees believe they will not receive a pay rise, 26% think it will not be as high as 2008 and 2% expect to take a cut.
As the redundancy barometer soars, Hughes thinks employees should remember: "What's better - not having a pay rise or not having a job?"
