Strategies in a recession - pay freezes stay in place

One of the key actions taken by many businesses in response to the recent recession in the UK was to negotiate (or impose) pay freezes. A very useful article on the BBC reports the findings of a new survey from the Labour Research Department of negotiated pay deals done with trade unions in the UK which suggests that pay freezes are likely to remain a key feature of business life during 2010.

This is ideal research material for students preparing for AQA BUSS4 in June 2010/Jan 2011. A pay freeze impacts directly on the operating costs of a business and can be considered as a key short-term response adopted by a business facing a fall in demand. But the pay freeze has clear implications for a key stakeholder group - employees.

The LRD explain that a number of companies are extending pay freezes originally put in place in 2009. Examples include Hanson Building Products, motor manufacturer Nissan, motor parts manufacturer Stadco Powys, and Bolton Evening News and Bury Times (Newsquest). Staff in these companies will go without a pay rise for the second year in a row!