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Pay freezes and pay cuts still abound as cost of living rises, according to CIPD findings


Pay packets are being hit hard with most employees suffering no pay rise in last six months, according to the CIPD.

The Employee Outlook: focus on pay, published this morning and based on a representative sample of more than 2,000 people in employment in the UK has found pay levels have dropped lower than the cost of living.

The survey finds that almost three in five (58%) employees have received a pay freeze since January 2011, while around one in 20 (6%) have had their base pay cut and only one in four (28%) have received a pay rise.

The public sector is being hit the hardest with over three-quarters of employees there (77%) receiving a pay freeze (compared to 52% and 55% in the private and voluntary sector), 4% a pay cut (compared to 7% and 8% in the private and voluntary sector) and 13% a pay increase (compared to 32% and 30% in the private and voluntary sector). Among those who have received a pay increase so far this year, the median is 3%.

Within the private sector, those most likely to have seen their base pay go up in the first six months of this year work in manufacturing (48%) and finance (46%). Those working in hotels and restaurants (19%) and construction (25%) are the least likely to have seen their salaries increase.

Salary increase is associated with the size of the employer, with those working for micro employers least likely to have received a pay rise (11%), followed by small (29%), medium (36%) and large (33%) organisations.

The pay freeze capital of the UK is the North East, with 75% of employees reporting that their pay has not risen since the start of the year, followed by the West Midlands (66%). Those working in Scotland (39%) are most likely to have enjoyed a pay rise.

The CIPD's performance and reward adviser, Charles Cotton, said: "Even those who are lucky enough to get an increase in their pay will find it below the current cost of living, compounding consumer belt tightening. Inflation figures later this month will highlight growing pricing pressures, which is likely to continue for some time.

"We will see some increase in the number of private sector workers receiving a pay award in the second half of 2011, especially in the retail, catering and hotel sectors, as the increase to the national minimum wage comes into effect in October. However, given that the busiest time for pay awards in the private sector is between January and May, most of these workers who have not received a pay rise so far will now probably not get one at all."