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A ‘difficult’ year ahead for employment

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Employment conditions are expected to remain difficult throughout 2010 as businesses continue to struggle with weak demand.

According to the British Chambers of Commerce’s latest Monthly Business Survey, almost two thirds of employers (63 per cent) intend to introduce wage freezes or pay cuts next year.

Nearly one in five (18 per cent) are looking at dropping employee benefits such as bonuses and gym membership.

The squeeze on pay packets, the BCC said, is a sign that firms do not envisage that the economy is likely to pick up dramatically in 2010, this despite forecasts that the recession may be over by the last quarter of 2009.

Two thirds of those firms polled reported that they would be operating at the same or reduced capacity levels in the first quarter of 2010, a strong indicator that businesses believe demand and the trading environment will remain uncertain.

David Frost, the BCC’s director general, commented: “It’s clear that another tough year is in store for the private sector. Thanks to businesses and their employees, who have made huge efforts to avoid extra redundancies during this downturn, unemployment is lower than most expected.”

Mr Frost went on to say that he believed that 2010 will be a crucial year for the UK’s economy.

The BCC argued that the private sector should be helped to generate investment, growth and jobs through a reduction in taxes and red tape.

Mr Frost concluded: “Support and incentives must be provided where needed, and the economy must be rebalanced away from debt and the public sector.

“From what businesses tell me, they will get on with the job of creating wealth and employment, but they simply need government to get off their backs and let them do it.”