UK employees will receive an average pay rise of 1.46% this year - among the lowest rates on offer anywhere in the world.

The UK will lag behind all but six of 88 countries surveyed by the Hay Group but UK staff fare better than employees in Hong Kong, Slovakia and Portugal (who will have an average 1.2% pay rise), Ireland (0.8%), Latvia (0.67%) and Singapore (0.22%).

But staff in the US will enjoy an average 1.7% pay rise, German employees will get (1.48%) and in France they will receive on average 2.2% pay rises.

Almost two-fifths of UK organisations (38%) plan to freeze salaries compared with just 18% worldwide.

The survey of 2,000 private and public-sector organisations also shows 36% of UK organisations plan to reduce their headcounts, compared with 27% as a global average.

HR departments fear for the future of their organisations with 90% reporting concerns about employee morale.

Colin Evans, UK head of reward services at the Hay Group, said: "There is huge pressure on organisations to cut staffing costs quickly but the focus on short-term measures, particularly reducing headcount, may jeopardise the UK's ability to bounce back come the eventual upturn.