Below inflation pay rises on the cards, survey shows

Accountants and business advisors BDO showed that 56 per cent of the region's larger businesses intend to give staff a lower-than-inflation rise at the next settlement, while 35 per cent will maintain pay freezes.

Only two per cent predict they will be able to offer a pay rise of five per cent or more and none of the business leaders taking part said they expected to have to press for pay cuts in the coming wage round.

The findings come from a live voting session that formed part of the Yorkshire Report 2010 dinner event hosted by BDO.

Sir Richard Needham, former trade minister and now senior independent director at Dyson, a speaker at the event, said: "I am surprised at the results because the Yorkshire Report shows that operating profit for the top 150 companies in Yorkshire is down by 54 per cent, which would suggest that these businesses don't have the money to award pay rises unless they increase prices, which is not a viable option in the current economic climate.

"The question is, however, are businesses worried that if they can't pay market rates they will begin to lose staff?

"This goes back to the age old question of how to reward people, particularly during a recession.

"A combination of solid base pay, bonuses linked to performance and a long-term incentive plan, will encourage motivation and staff retention in these tough times."

Sir Richard was on a panel of experts, which included Stuart Hall, chief financial officer of Saltaire-based set-top-box maker Pace, and Tim Clarke, corporate finance partner at BDO

in Leeds.

Mr Hall said: "The concern of pay round settlements is a slightly different issue for Pace as we are a global company so face different challenges in each country.

"However, one thing that remains consistent across the board is the fact that everyone is focused on their cost base."

Copies of the Yorkshire Report are available by e-mailing [email protected]