Pay freezes still account for a minority of all pay outcomes monitored by IDR so far this year, but there has been a steady increase in their incidence, from 8% of all awards during the first three months of the year to 14% for the second quarter, and the proportion for the whole of 2020 now stands at 14% as well.
The last time we observed a sharp rise in the number of pay freezes was during our monitoring of awards in 2009, in the midst of the last major recession. That year began with pay freezes accounting for one-in-ten pay review decisions in January and February, and then rising to one-in-four by mid-April. As at that time, a number of instances in 2020 relate to the freezing of pay for executives and senior managers, while lower-paid staff have received pay rises. Examples of this type of approach include the outcomes of pay reviews at BT and Transport for London (TfL).
As we move into the latter half of 2020 the proportion of pay freezes may increase further as a result of decisions made by firms who have told us that they are deferring decisions on their pay award to later in the year. Many businesses, particularly in hard-hit sectors such as hospitality and air transport, are pausing their pay reviews while they manage the crisis by reducing working hours or employee numbers and sometimes other measures as well, including cutting pay for high earners. Other firms are waiting to see whether consumer confidence recovers. Not all deferrals will result in freezes, but much depends on the trajectory of economic demand.
IDR will continue to monitor the situation and if you would like to help with our research then please tell us about any pay increase or pay freeze by emailing us at IDRteam@incomesdataresearch.co.uk or by using our online survey below.