SME bosses and managers feeling pressure to award above inflation pay rises.

 Employers are under increasing pressure to award bumper pay rises, according to a survey commissioned by Croner Reward, part of Wolters Kluwer UK, which has one of the largest continuously updated salary databases in the UK.

The survey was carried out in June 2008 and covers approximately 150 employers in the UK, including Directors and Managers.

In the survey bosses were asked for details of pay awards given and the reasons for granting them.

Many said they were feeling the pressure from staff because of rising inflation due to fuel costs and energy prices. They also blamed public sector pay agreements for influencing salary negotiations within their own businesses.
 
Details of report

In general it was found that inflation and public sector pay deals are influencing decisions on pay awards.

Most employers gave pay rises higher or in line with last year’s award – but 30% gave less.

The basic percentage pay rise across the board was between 2% and 4%.

The need to retain staff influenced pay decisions, rather than lose staff and go through a costly recruitment process and the finding found that some employers are waiting until later in the year to decide how much to award their staff.
 
Andrew Walker, Business Director at Croner Reward, said, “we are all experiencing a higher cost of living, partly due to fuel costs and energy bills, and no-one wants to feel financially worse off year on year, so we expect pressure on employers to give their staff pay awards at least in line with inflation.”

Walker added: “However, while it is clear that some individual employers have already taken the decision to give above average pay rises, many will not be in a position to do this. Setting aside the call for restraint in the public sector, many private sector employers will themselves be feeling the pinch and they will find it hard to divert already stretched financial resource into this area

Walker advised employers to proceed with caution, "the last thing we need right now is a return to the days of spiralling pay competing with increasing customer costs for goods and services. This will only lead to further pressure on the economy as a whole," he said.

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