Pay deals slump amid downturn

Pay deals have slumped in recent months, with average increases now worth just 1.5 percent and some workers actually having their wages cut, according to new research.

Wage rises have fallen gradually since the end of last year and increases were now being outnumbered by pay freezes and cuts, said a study by the Labour Research Department.

Benefits such as pension contributions, sick pay and long service awards were also being cut, said the report.

"We are seeing the impact of recession really beginning to hit home on pay settlements, particularly in manufacturing, although some of the deals we have recorded show that significant pay increases are still possible," said Lewis Emery, LRD's pay and conditions researcher. "It is not certain whether April's figures represent a long-term trend. But it is worrying that employers are not only negotiating with unions over pay restraint, but also attempting to erode basic conditions, such as pensions, that will affect workers in the long term. Unions are likely to resist this strongly."

Brendan Barber, general secretary of the TUC, commented: "As LRD's research shows, the UK's pay picture is a very mixed one right now. Clearly there have been some instances where unions have agreed to put pay increases on hold or take cuts in wages to save jobs. But many companies are still profitable and can afford decent pay rises.

"The danger is that with inflation continuing to fall, employers may be tempted to trigger a process of widespread pay freezes or even take the opportunity to cut wages. This would be a very bad move and would undoubtedly prompt families to cut back on their spending - the last thing the UK's struggling economy needs right now.

"Unions will be on the lookout for employers trying to use the recession as an excuse to slash their wages bill."

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