Company Formation Owners Continue Pay Freezes


While the government has been concentrating on macro economics, most small businesses on the front line of the recession have been concentrating on how to ensure they don’t have to make redundancies.

One of the many strategies – including cost cutting, better cash flow management and diversification – that many small business owners employed, in trying to keep the jobs of the people that work for them, has been salary freezing. For the most part this strategy was the result of a shared commitment between employer and employee to try and ensure that redundancies didn’t need to be made.

However, a recent report conducted by the Confederation of British Industry, has revealed that while the UK is now on the brink of economic stability, most employers are still reluctant to increase salaries and thaw pay freezes.

Economist and business analyst, Tony Parsons, comments: ‘As the USA announced they were out of the recession, many employees in the UK thought that recession was over here too. They thought they could expect an increase in pay to pre-recessionary levels. However, we are not out of recession and it is important to remember that while many are suggesting that the worst is over, the instability of market conditions is still set to continue. Indeed, though growth is expected over the coming year, it will not be sufficient enough to secure pay increases to pre-recessionary levels.”