Pay freezes will be imposed across half of British industry next year, it was suggested yesterday.The latest employment trends survey from the CBI, the business leaders’ organisation, and Harvey Nash, the recruitment company, shows that half of employers plan to freeze pay in 2010. Only 4 per cent plan inflation-beating rises.

It will be the second consecutive year of wage freezes and will need to be reciprocated by restraint in executive pay, Harvey Nash said.

John Cridland, deputy directorgeneral of the CBI, said: “The worst of the recession may be over, but firms are ultra-cautious about increasing pay.” He believed that the fragility of any recovery means, at best, anaemic growth. “There is not going to be significant job growth and it is not going to allow companies to relax pay restraint.”

Albert Ellis, chief executive of Harvey Nash, said that many employers had been willing to sit down with workers and talk about how to reduce costs, but there were cases “where executive pay is out of sync with the economic reality and the public mood ... We urge continued restraint on executive remuneration, ensuring that a return to sustainable economic growth is not put at risk.”

On a more positive note, the number of companies operating a recruitment freeze has dropped from 61 per cent in the spring to 37 per cent.

The survey, conducted in August and September, also shows that far fewer employers see the need next year for some of the extreme measures used to control costs during 2009, such as shutdowns, cuts in overtime and bringing forward holidays.

However, a recovery in recruitment is still some way off. Although 27 per cent of employers said that they expected to recruit more people than last year, 42 per cent said that they expected the number of recruits to fall.

It also emerged from the survey that the number of employment tribunal claims is increasing.

The CBI said that continuing pay restraint in the private sector would underline the disparity between working in the private and the public sector. Mr Cridland said that pay cuts to preserve jobs were part of of the new economic reality in the private sector, and “given the alarming state of the public finances we must see similar pay restraint in the public sector”.

Private sector industrial relations looked likely to remain good next year, according to Mr Cridland.

Graduate jobs

Graduate job openings remain sparse, the CBI study indicates. In spring, 38 per cent of employers said they were freezing recruitment of graduates. With the main period of recruitment now over, more than half of companies that hire graduates said that this year’s hiring was slightly or significantly less than 12 months ago. A third took the usual number.

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