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Pay rises dropped by almost a fifth between 2008 and 2009

The number of pay rises in 2009 dropped 17% from the previous year as rewarding employees financially has been put firmly on the backburner, research shows.

Since 2008, the number of people in the UK receiving pay rises fell two-thirds (67%) to half (50%). More employees have had a pay freeze (up from 24% in 2008 to 41% now). Yet, the proportion of employees who are satisfied with their pay rise has doubled since last year, from net+31% to net+62%.

According to a CIPD report, employee satisfaction rates have risen since 2008. But public-sector workers are less satisfied with their pay rise (net satisfaction score +48%) than private-sector workers (+69%) despite being much more likely to be awarded one: 76% receiving a pay rise compared with 40% in the private sector (a fall from 64% in 2008).

The state of the economy is the most common reason for pay freezes and cuts (71% and 72% respectively), followed by how much the organisation needs to spend. It is also the reason most organisations use to explain changes in pay (57%).

And those who have got a new job after being made redundant are on average earning 25% less compared with what they used to earn.

Charles Cotton, reward adviser at the CIPD, said: "Employers in the private sector will be relieved to see that their employees are particularly understanding about the economic realities they face. Even pay freezes have not so far resulted in high levels of employee dissatisfaction.

"However, public-sector employers will be worried that many of their employees are not satisfied with their inflation-busting pay rises in 2009. Given that pay freezes look a reality in the public sector in 2010, it does not bode well.

"More must be done to manage pay expectations in that sector and shift the focus from pay to other forms of reward if they are going to hold on to staff as the rest of the economy recovers."