Tougher economic conditions for manufacturing firms mean that Christmas benefits are on the slide, according to new research.

The figures come from the preliminary findings of the Chartered Institute of Personnel and Development’s (CIPD) annual reward management survey, to be released in February.

There’s been a sharp drop in the number of manufacturing firms planning to provide a Christmas party – down to 60 per cent from 71 per cent in 2005.

But public sector and voluntary sector organisations still remain those least likely to provide a gift or throw a party at Christmas.

Charles Cotton, CIPD reward and employment conditions adviser, says: “A combination of intense competitive pressure and higher non wage labour costs has squeezed profit margins over the last year.

“This will have resulted in greater efforts to control costs causing modest increase in pay cuts and job losses. So less festive generosity this Christmas is likely to be symptomatic of such pressures, rather than indicating a more Scrooge-like attitude just for the sake of it.

“Making cut backs might be necessary but if these are not communicated effectively to staff they could cause lack of motivation and poor performance, costing businesses more in the long-term.”

The results indicate that 64 per cent of employers meet the majority or most of the cost of a Christmas party. However, only 9 per cent now provide a Christmas gift such as a hamper or vouchers.

“Research indicates that employees are attracted, retained and motivated by a whole variety of rewards and there is not one solution that will meet everyone’s needs,” says Cotton.

“In today’s tight labour market it is becoming more and more important for organisations to be flexible in their approach to reward if they are to compete in the war for talent.

“Employers need to work with employees to find out what they want and then develop rewards that meet both the needs of the business and the workforce,” adds Cotton.

Other findings indicate that small private sector organisations are most likely to provide a gift or organise a party, with 82 per cent of firms employing up to 49 staff paying for a Christmas party while 8 per cent provide a gift. By contrast only 44 per cent of those employing 5,000 or more provide a party and just 3 per cent give a gift.