Next year’s pay rises ‘will remain low’

The reward of a pay rise may not be forthcoming for many UK employees in 2010, as a report reveals that many long-term business deals are unlikely to be renewed in the new year.

According to the Labour Research Department (LRD) report, a slowing in pay rises seen during the recession has arisen as a result of long-term deals between employers and unions, but that with these coming to an end, pay rises could dry up.

Indeed, while one in four pay deals involved long-term arrangements, next year the number will drop to one in seven.

Lewis Emery, LRD’s pay and conditions researcher, said that this partial retreat away from long-term deals could lead to subdued pay increases in 2010.

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He added: "At least four crucial questions overshadow the chances of continuing pay growth: will current pay freezes be lifted? What kind of pay offers will employers make with fewer long-term deals setting the pace? Will RPI inflation return? […] What will happen with public sector pay?"

A recent study by pay analysts IDS revealed that one in three UK employers have initiated pay freezes this year.