Pay cuts planned by just 1% of firms

ONLY 1% of companies plan pay cuts for their workers next year, a survey has indicated.

The findings may offer a glimmer of hope for private-sector workers buffeted by pay cuts and tax hikes since the eruption of the financial crisis.

The Pricewaterhouse-Coopers research on salary movements surveyed 155 companies across all business sectors in May.

The results show that about 56% of firms plan to increase pay next year, albeit by a modest 2% on average.

Approximately 43% of companies say they will freeze pay in 2012. The remaining 1% or so say they intend on cutting pay.

However, within the overall findings, there are variations by employee level.

For example, while 56% of companies plan pay increases, only 52% plan to increase the pay of their executives and 54% the pay of their production staff. In contrast, 60% of firms plan to increase pay for middle management and professional levels.

Variations are also evident within the pay freeze category. While 43% of companies say they will freeze pay overall, 47% say they will freeze pay for executives, while just 39% say they will freeze pay for middle-management.

The Government, which has already made clear that income taxes will not rise in the budget, will hope that the survey boosts workers’ confidence.

Finance Minister Michael Noonan is anxious for people in steady employment to resume spending in the hope of boosting the domestic economy.

But his calls for people to resume shopping have attracted a lot of criticism given the glut of tax increases, pay cuts and welfare cuts imposed in recent years.

Meanwhile, the PWC report — entitled the Reward Trends Snapshot Survey — also indicates that there is a skills shortage in certain sectors despite so many people being out of work.

“Despite continuing high unemployment levels, the survey suggests that organisations are experiencing salary pressure for certain employee segments,” PWC stated.

“This is primarily driven by skills shortages in roles such as risk and compliance, experienced specialists in technical areas (eg, software, engineering) and senior roles in IT, finance and sales.”