Millions to face pay freeze, salary cut in UK: Report

LONDON: Millions of private sector workers in the United Kingdom are likely to see their earnings slashed or pay freeze largely due to the global economic slowdown, media reports say.

"With the economy plunging deeper into recession, and inflation likely to drop below zero per cent into deflation, the CBI (Confederation of British Industry) has warned that the 'overwhelming majority' of its members will freeze wages this year," a newspaper report said.

Tens of thousands of other private-sector workers are also likely to see their earnings slashed. Several professional firms have reduced salaries by 20 per cent by putting employees on a four-day week.

Quoting British Chambers of Commerce Director-General David Frost, the paper said "across the country I am hearing more and more businesses left with no choice but to freeze and cut pay".

Reports further said that pay freezes are being implemented across industry, hitting professionals and lower-skilled workers, senior executives and junior staff.



Falling inflation and rising unemployment have made it easier for firms to impose pay freezes and cuts. Inflation dropped to just 0.1 per cent in January and is set to fall into negative territory when the February figures are released this month.

Economists believe that by September Britain would be in the grip of deflation, with overall prices down by three-four per cent over a year earlier.

Unemployment rose to 1.97 million last month, the highest in 12 years. It is expected to reach 3 million over next year.

Meanwhile, pay freeze and pay cuts come at a time when employees in the public sector are enjoying pay rises.

"It is unacceptable that the public sector should not share any of this pain. There is already an apartheid between the public and private sectors on pensions. We cannot have apartheid on pay too," Frost added.

Under three-year public-sector pay deals agreed upon last year, National Health Service workers would enjoy a pay rise of 2-3 per cent this year and next. Similar deals were awarded to teachers and the police, while local government workers are seeking a 6 per cent pay rise.

Quoting TaxPayers' Alliance Campaign Director Mark Wallace, the newspaper said: "The government has locked taxpayers into three years of pay rises for millions of public-sector workers ...

... [W]hile millions of workers in the private sector are facing a pay freeze, cut or even redundancy. This is not only unfair; it is irresponsible and economically unsustainable."