Workers can warm to pay freeze if handled sensitively

Staff understand that things aren’t easy right now and many will have already written off a mid-pandemic pay rise, but if you can show you’re grateful for their hard graft, they will appreciate it.

A recent report found that 19.3% of pay awards in 2020 resulted in pay freezes for employees. Many other organisations deferred pay award decisions or rolled back on those that had been made but not implemented.

But things are likely to be tighter still in the opening months of this year, even for those organisations continuing to give increases. It is forecasted rises of around 2% on average at the 1 January and 1 April pay reviews – compared with 2.5% for the same reviews last year.

A tanking inflation rate should help reduce the gap, and the fact that the 2008/9 financial crisis has conditioned many to realise that annual pay rises are not always a given should also help. But balancing employee trust with a company’s efforts to remain financially stable is still a huge challenge, and the key is to be as transparent as possible.

Organisations that have not built habits around regular, open conversations with employees will see a negative impact over time.  Now it is all-the-more critical to keep in touch with how your team are doing and to ensure they are kept updated about the businesses overall financial health, so they have a clear understanding of the business rational for decisions.

It is thought that the private sector will divide into three roughly equal proportions: organisations that will just freeze pay without reviewing it, those that will budget to give pay rises as normal and those that will give rises to only some employees.

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