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Cath Everett

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Containing labour costs key priority for business


The majority of employers are keen to keep a lid on pay rises this year as containing labour costs remains one of their top priorities.

But following an unprecedented year when many staff accepted curbs on pay and changes to working patterns to protect jobs during the recession, seven out of ten bosses appreciate that they now face the tricky task of communicating and engaging effectively with personnel in order to retain them.
These are the findings of a survey among 666 UK employers undertaken by business lobby group the CBI and recruitment consultancy Harvey Nash.
The study entitled ‘Picking up the Pace: the CBI/Harvey Nash employment trends survey 2010’ indicated that only 3% of companies intended to offer above RPI inflation pay rises this year, while only three out of ten believed that they would be in line with RPI rates.
One in five expected pay awards to be below RPI levels, while a quarter said that increases would be directed only towards selected employees. A mere 16% of respondents said that they intended to keep pay freezes in place, however, down from 47% six months ago.
Recruitment activity is likewise improving, but is expected to be patchy and targeted at filling key posts. Only 5% of organisations believe that hiring will increase across their business as a whole, while 23% anticipate that it will be higher only in certain areas. A further 27% expected it to be higher in some departments and lower in others.
John Cridland, deputy director of the CBI, said: “We’re seeing the first indications in the market that businesses are gearing up for a return to growth and this trend is most concentrated in the technology, financial services sectors and some areas of manufacturing. Although the recovery is fragile, there is a sense that the UK economy as a whole has turned a corner.”
Demand for talent would continue, although the majority of employers expressed concerns over finding appropriate skills to capitalise on the recovery, he added.
As for employers’ top three priorities over the coming months, the number one was staff engagement (67%) and continuing to communicate the impact of the recession on both the business and their lives. The most popular means of undertaking such communication to date has been face-to-face meetings (89%), backed up by email updates (54%), intranet postings (48%) and letters (26%).
Such activity was necessary because nine out of ten employers had introduced changes to working patterns to cope with the bear economy. A huge 58% and 54% of firms respectively implemented pay and recruitment freezes, while just over a third went down the flexible working route.
Some 87% of businesses believed that staff understood the need for such action, however, with just over half saying that personnel had showed a flexible attitude towards such change.
Next on the priority list, meanwhile, was containing labour costs (48%), followed by recruiting staff for key vacancies and retaining personnel in joint third place (42%). A year ago, nearly two thirds of companies had a recruitment freeze in place, but the figure now stands at just 5%.