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Employers must explain pay freezes to prevent productivity going cold

4th January 2012

Employers are being urged to raise their 'communications game' to keep employees motivated and productivity flowing as pay freezes become the norm.

The Chartered Institute of Personnel and Development (CIPD), claims that two in five employers are failing to communicate the rationale behind their decision to raise, cut or freeze their employee's pay.

But communication is key to ensuring that employees remain satisfied, claims the CIPD, as 2011 saw more pay cuts and freezes than in any year since 2008.

Commenting, Charles Cotton, rewards advisor at the CIPD said: "2012 looks like it will be another year of subdued pay rises for many in the private sector and pay freezes for most of those in the public sector. While inflation looks set to fall and personal allowances due to rise, these will not be enough to increase real earnings back to their pre-recessionary levels.

"The challenge for employers is to keep staff motivated at work while many employees see their living standards hit. Organisations should review how they communicate the economic realities the business faces and what needs to happen for pay to increase. Managers face a tough challenge in maintaining employee commitment and motivation but the penalties of failure will be falling national productivity and a vicious circle of continued declines in pay and jobs as we lose out to our international competitors."