Average British pay rises are running at just 1 per cent, with close to half of workers in the private sector having their pay frozen this year, according to new research.

About 41 per cent of all pay deals were pay freezes, according to an analysis of 46 settlements carried out by Industrial Relations Services (IRS) in the second quarter.

The average pay award in the manufacturing sector was 0.3 per cent. The public sector fared a little better, recording an average settlement of 2.3 per cent, according to the research.

Sarah Welfare, of the IRS, said: “Pay awards have taken a far greater hit in the current recession than they did in the recessions of the 1980s and 1990s, our data suggests. All evidence suggests that pay awards will remain subdued for the rest of 2009.”

“With rising unemployment, a low minimum wage rise due in October and headline inflation in negative territory, the chances of higher pay rises for employees in the near future will be slim.”

The pay freeze data comes as unemployment continues to increase. The latest figures from the Office for National Statistics show that unemployment hit a 14-year high of 2.44 million in the three months to the end of June, with 16 to 24-year-olds the worst hit.

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