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A third of firms keep wages on hold

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One out of three firms have imposed wage freezes on their employees this year, a new study has found.

The research, carried out by pay analysts Income Data Services (IDS), revealed that many employers chose to cap wage rises at zero in order to protect jobs.

Where pay rises have been awarded, the average this year has been 2.9 per cent.

“In many cases pay freezes have been justified through commitments to safeguard jobs,” said the IDS report. “Firms are conscious of the need to retain a skilled workforce for when the market picks up.”

However, the report warned that, should inflation begin to rise as predicted, there will be increasing pressure on wage demands.

It also said that, come the economic recovery, the perennial problem of skills shortages will re-emerge.

Ken Mulkearn of IDS commented: “Most firms with zero awards in 2009 may return to increasing pay again next year. So while prospects for the economy remain uncertain, many firms will be planning ahead for a possible recovery in 2010.”