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Poor pay expected in 2009

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UK employees have poor but realistic salary expectations for next year, according to a report published today by the Chartered Institute of Personnel and Development (CIPD).

The CIPD’s annual Barometer Report reveals the full extent of the gloomy pay prospects for next year, after 2,604 employees were quizzed on their attitudes to pay in 2009.

The results showed that 28% of employees felt they would not receive a salary increase in 2009; 26% believe they will get a pay rise, but it will be less than last year; whilst 2% think they may even be given a pay cut.

The CIPD’s reward adviser, Charles Cotton, said that employees are simply being realistic about their pay prospects: “Against this backdrop, employers will need to work hard to find new ways to motivate their employees to perform. Targeting pay increases to reward superior performance, making intelligent use of non-financial rewards, and targeted investment in training and development are all ways of making limited budgets go further in efforts to weather the storm, and emerge ready to capitalise fully on the recovery.”

In further gloomy news, the report authors predict that job losses could total 600,000 next year and that 2009 could be the worst year for jobs in two decades.

“Our current expectation, based on available survey evidence and employer soundings, is that the number of redundancies will jump sharply in the early months of 2009, once employers take stock of the economic outlook,” commented John Philpott, chief economist at the CIPD.

“The period between new year and Easter is likely to be the worst for redundancies since 1991. Similarly, the CIPD’s baseline forecast is that by the end of 2009 the number of people unemployed and actively seeking work will have increased to 2.8 million, 1 million above the autumn 2008 figure.”

Philpott added that the successful organisations will be the ones that maintain trust and engagement through open and honest communication; plan to retain genuine talent and don’t rashly cut back on investment in skills.

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