Half of North East companies ready to hit workers with pay freeze in bid to survive

North East TUC secretary Kevin Rowan

North East TUC secretary Kevin Rowan

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NEARLY half of companies in the region plan to freeze wages this year as they fight to stay afloat, according to the region’s leading business organisation.

A survey by the North East Chamber of Commerce found more than 48 per cent of businesses said they would not be changing pay settlements agreed with employees a year ago in the coming 12 months.

More than 35 per cent of businesses surveyed as part of the chamber’s quarterly Business Barometer survey said they would be increasing wages by between two and three per cent – but 1.5 per cent said they were actually planning to reduce wages from levels paid in 2011.

North East Chamber of commerce Director of Membership and Policy Andrew Sugden said businesses – and staff – were having to take the long view. He said short-term pain would be worth it in the long-run if it helped businesses to survive and proposer when times improved.

Mr Sugden added: “We need to create more wealth in the North East and for this to happen we must focus on delivering strong business growth that will positively impact household incomes.

“By taking a pragmatic approach to wage increase, businesses are future-proofing themselves against potential economic fluctuations and will be healthier for it in the long run.

“The fact so many companies are taking this course of action is a demonstration that inflation is not a home-grown issue and interest rate increases are not required in 2012.

“In the current economic climate, pay freezes represent a sensible course of action to help companies insulate themselves against global economic conditions and are in-line with the public sector wage freezes we have seen across the UK.”

North East TUC regional secretary Kevin Rowan said many employees had already seen wages frozen and were suffering as a result.

He added: “For a lot of workers, that has been in place for two years or more and, at the same time, inflation has gone up to five per cent.

“There is a point at which it becomes unsustainable. In real terms, people’s pay has fallen by five, ten per cent or more and that is just not something people should put up with.”