Fewer of us are expecting a pay rise next year

We’ve heard what bosses think about their prospects for next year – now, it’s time for workers to have their say on their pay prospects for 2011. And the news isn’t great. According to a survey by the Chartered Institute of Personnel and Development, when asked whether they thought they would get a pay rise next year, some 58% of workers said they expected to. Which looks encouraging – until you compare it with last year’s figure, which was 67%. So it could be a pretty thrifty Christmas…

Of the 3,000-odd people questioned, a third said they were predicting a pay freeze (that’s compared to 25% last year), but the number of those who forecast a pay cut was relatively small: just 2%. In the public sector, it’s less encouraging: about half said they’re expecting a pay freeze, although an impressively optimistic 44% think they’ll get a rise (given the public spending cuts, they’ll be lucky). And of those who are predicting an increase, the average forecast in the private sector is 3%, while, not surprisingly, in the public sector it’s lower - more like 2%.

This year hasn’t exactly panned out brilliantly for staff, either. Since 2008, the number of employees who have had a pay increase has fallen from more than two-thirds, to just under half, while the number whose pay hasn’t changed has risen from 24% to 44%. Although on the plus side the figure for those who received a pay cut – which rose from 3% in 2008 to 5% in 2009 - dropped slightly, to 4% (so it's still pretty rare, even in these straitened times).

So pay cuts are falling, which is good – and, by all accounts, they'll fall again next year, too. But if inflation climbs to about 4% next year, as some economists are predicting, even a modest pay rise would actually amount to a real-terms drop in salary. And workers say they’re struggling. In fact, one in five of the people questioned said if they don’t get a pay rise next year, they’ll leave their organisation – while 7% said they’ll work less hard.

With that in mind, then, it might be worth investing that little bit extra to keep them happy. Because, as we all know, replacing a good employee is expensive and time-consuming. And getting rid of one who isn’t working hard enough and then replacing them costs even more..