The UK's economy is being affected by a drying up of global credit markets
Workers are being asked to take pay cuts of up to 40% because of the economic slowdown, one of UK's biggest unions has warned.
The GMB told the BBC it had received reports from members about wage reductions of between 30% and 40%.
It says companies are feeling the pain of the credit crunch and are looking at ways to save money.
The Federation of Small Businesses says lower wages and longer hours may be the only way to prevent redundancies.
Martin Smith, from the GMB union - which has 600,000 members working in every part of the economy - said he knew of several firms who were cutting pay.
"We're also hearing on the grapevine from a number of our employers up and down the country that they're also feeling the squeeze, and they want to start talking about pay cuts and other ways of saving money," he said.
Dave May, a hire car driver, told the BBC: "I've been asked to take a massive pay cut of over 40%.
"At the moment I'm earning over £30,000 a year, and I've been asked to take a pay cut of £12,000, and it's just basically all down to the credit crunch."
Slowing property markets, the global credit crisis, and high costs of commodities such as oil are all said to be hurting the UK economy.
Rising food and fuel prices pushed inflation to 3% in April, well above the government target of 2%.
On Thursday, UK interest rates were left unchanged at 5% amid concerns about the pace of inflation.
The Bank of England has already cut interest rates three times since December in an attempt to help the slowing economy.
House prices are falling as the credit crunch makes lenders reluctant to provide mortgages.
The latest figures from the biggest mortgage lender, the Halifax, showed a 2.4% fall in house prices during May.
Earlier this week, the Organisation for Economic Co-operation and Development predicted that UK growth would slow to 1.8% this year and to 1.4% in 2009.