Companies poised to freeze salaries as economy slows

The current credit crunch and volatile economic conditions are prompting a number of companies to consider freezing salary levels.

Three-in-ten companies are currently poised to do so according to the Hay Group Global Survey into the Effects of Recent Economic Events. Some 16% of companies in the UK, meanwhile, feel their business results will be significantly lower than budgeted levels, while 15% of the 1,003 firms surveyed said they were going to freeze salaries for all employees.

Nearly one in three employers (27%) have either made changes or are making changes to healthcare benefits, while a fifth (20%) plan to or have made changes to retirement and pension benefits.

Retaining and motivating staff, however, remains a key priority, with 38% indicating they have either made changes or are intending to make changes to retention schemes for high performers.

Overall in Europe, the Middle East and Africa (EMEA), 34% of companies in Western Europe, 32% of companies in Eastern Europe and 36% of companies in Africa and the Middle East are considering freezing basic salaries.

However, in Africa and the Middle East, almost half of employers (48%) intend to make changes to healthcare benefits, while 28% are planning changes to retirement benefits due to the economic situation.