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More and more firms are keeping wages on hold

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One in three of the businesses included in a recent survey froze their wages in April.

According to Incomes Data Services (IDS), of the pay settlements that it monitored last month, some 30 per cent involved pay freezes.

IDS said that more and more firms were pegging wages at current levels. Over the first quarter of the year, pay freezes accounted for 20 per cent of wage deals. Now that figure has risen to a third.

Where wage increases were agreed in April, the rate of pay rise was an average of 2 per cent, down from the 3 per cent recorded in the months from January to March.

The contrast with 2008 is even more stark. IDS said that of the 243 pay settlements it has analysed this year, some 64 resulted in wage freezes. The total number of wage freezes for the whole of 2008 was seven.

However, the IDS report pointed out that pay settlements are not following a universal pattern, with some sectors faring better than others during the recession. Some 40 per cent of wage rises involved increases of between 3 per cent and 4 per cent.

Ken Mulkearn, the editor of the IDS report, said: “Firms most affected by the recession are freezing or pausing pay, with most of the freezes concentrated in engineering and among firms which provide key industrial inputs, such as chemicals manufacturers.

“This difference in levels of pay settlements illustrates that there are clear sectoral differences when evaluating the effects of the recession.”