Majority of firms plan to freeze wages as recession continues to bite

The latest British Chambers of Commerce (BCC) Monthly Business Survey, published today, reveals the extent to which company cash flow is being squeezed and the increasing number of employees in the private sector facing pay cuts or freezes.

The results from 400 companies across the UK show that a staggering 58 per cent of businesses are planning wage freezes this year and half of firms are considering or certain to make redundancies in the next 6 months.

The key findings from the survey include:

• 58% of firms plan to freeze salaries this year, with 12% planning to cut wages.
  
  
• 50% of companies are either considering or certain to make redundancies during the next 6 months.
  
  
• Half of the businesses questioned attributed most responsibility for the UK’s current economic position on the banks, with the government seen as most responsible by 37% of respondents. The Financial Services Authority escaped with just 6% of the blame.
  

In a speech at the BCC’s Annual Convention in Birmingham today, the business group’s Director General, David Frost, will challenge Ministers with the results. He will argue:

“It is the country’s private sector that has faced all the pain of this recession. The results of our most recent poll shows just how hard times are, with half of firms considering making redundancies.

“The government must realise that the private sector cannot bear all of the pain. There was some support in the Budget, but more is needed to help Britain’s embattled businesses so that they can drive our economy out of recession, creating jobs and wealth in the process.”

Ends

Media Contact:

Sam Turvey
Tel: 020 7654 5813
Email: s.turvey@britishchambers.org.uk

Notes to Editors:

Full survey results:

The survey was conducted between March 23rd and April 6th 2009

Q1 – Wage increases

9.0% responded that increases will be more than 3 per cent.
9.8% responded that increases will be up to 3 per cent.
6.7% responded that increases will be up to 2 per cent.
3.6% responded that increases will be up to 1 per cent.
57.6% responded that wages would be frozen.
11.8% responded that wages would be cut.
1.5% did not respond.

Q2 – Redundancies 

11.8% stated that redundancies within the next six months are certain.
38.3% stated that redundancies over the next 6 months will be considered.
48.1% stated that redundancies were not an option.
1.8% did not respond.

Q3 – Working hours

27.5% stated that working hours would increase over the next 6 months.
22.1% stated that they would decrease.
50.1% stated that they would remain the same.
0.3% did not respond.

Q4 – Responsibility for UK economy’s position

37% responded that the Government was responsible.
0.5% responded that foreign governments were responsible.
49.6% responded that banks were responsible.
5.9% responded that the FSA was responsible.
3.6% responded that individual consumers were responsible.
2.6% responded “Other”.
0.5% did not respond.

Q5 – Effect of an early General Election

42.9% stated that it would improve business confidence.
15.4% stated that it would worsen business confidence.
41.4% responded that it would have no effect on business confidence.
0.3% did not respond.

Q6 – Working Time Directive

40.4% responded that it would have no effect.
16.5% responded that it would have little effect.
23.1% responded that it would have some effect.
12.1% responded that it would have a substantial effect.
8% stated that it would have a major effect.

Q7 – Prospects for the UK economy
 
9.8% responded that they expected the UK economy to improve.
62% responded that they expected it to deteriorate.
28% responded they expected the state of the economy to remain the same.
0.3% did not respond.

Q8 – Effectiveness of local schemes

10.5% responded that new local and regional schemes have been effective.
36.8% responded that new local and regional schemes have been ineffective.
51.2% are not aware of any new schemes.
1.5% did not respond.

Q9 – Relationship with local Councils

8% stated that the downturn has resulted in a better relationship with their council.
21.1% stated that their relationship had worsened.
70.4% responded that their relationship was unchanged.
0.5% did not respond.

The British Chambers of Commerce (BCC) is the National Voice of Local Business.
The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce serving business across the UK, which employ over five million people.