Page last updated at 11:14 GMT, Monday, 16 November 2009

'Half UK firms' plan pay freeze

A graduate recruitment fair in London
The survey suggested half of firms are hiring fewer graduates

Half of all UK employers plan to freeze pay altogether despite signs of economic recovery, a survey suggests.

The research by employers' group CBI and recruitment firm Harvey Nash also found that only 4% of firms surveyed plan to give above-inflation pay rises.

But the number of firms not hiring new staff has dropped significantly, from 61% in the spring to 31%, it suggested.

Fewer firms also saw the need for extreme cost cutting measures, such as shut-downs and foregoing overtime.

Graduate recruitment

"The worst may be over but firms remain ultra cautious about increasing pay. Market conditions continue to be very tough and growth in 2010 will be feeble, so pay is going to be squeezed for some time," said John Cridland, deputy director-general of the CBI.

"The new spirit of co-operation between employers and workers will be a real fillip for UK competitiveness as we return to growth, delivering more flexible working and a welcome improvement in the work-life balance."

The survey also found that half of firms had cut back on graduate recruitment, while almost a fifth were employing more graduates.

Figures released last week showed that youth unemployment had risen to 19.8%, the highest rate on record.

The research also found that almost half of respondents think the UK is now a less attractive place to do business than it was five years ago.

But a third expect it to be more attractive again in five years' time.

The survey was conducted in August and September among 243 firms employing a total of more than 500,000 people.

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