BCC: Employees To Face Another Tough Year In 2010

Employees are expected to endure another tough year in 2010 as businesses continue to face an uphill struggle in difficult trading conditions.

The British Chambers of Commerce's latest Monthly Business Survey reveals that 63% of businesses are planning wage freezes or pay cuts next year, while 18% are considering the removal of benefits, such as bonuses and gym membership.

The persistent squeeze on the employee pay packet is an indication that companies do not see economic conditions dramatically improving in 2010, despite hopes that the end of the recession may have arrived in the final quarter of 2009.

A very fragile recovery was highlighted in the survey, as a majority of firms (67%) stated that they would operate at the same or reduced capacity levels in the first quarter of 2010 - a strong indicator that businesses believe demand and the trading environment will remain uncertain. This trend continues from November's survey, when companies stated that a lack of customer demand was the biggest obstacle over the next 12 months.

Commenting on the results, David Frost, Director General of the BCC, said:

"It's clear that another tough year is in store for the private sector. Thanks to businesses and their employees, who have made huge efforts to avoid extra redundancies during this downturn, unemployment is lower than most expected.

"2010 is going to be a crucial year for the UK's economy. The private sector must be allowed to generate investment, growth and jobs by reducing the tax and red tape burden; support and incentives must be provided where needed; and the economy must be rebalanced away from debt and the public sector.

"From what businesses tell me, they will get on with the job of creating wealth and employment, but they simply need government to get off their backs and let them do it."

Details:

260 businesses responded. Firm sizes were broken down as follows:

• 0-9 employees: 45.1%
• 10-49 employees: 32%
• 50-99 employees: 10.5%
• 100-249 employees: 6.2%
• 250-499 employees: 3.1%
• 500+ employees: 3.1%

Firms were asked about wage setting decisions in 2010:

• 4.7% stated they would be reducing wages
• 58% stated that they would be freezing wages
• 6.2% stated that they would increases wages up to 1%
• 14.8% stated that they would increases wages up to 2%
• 11.7% stated that wage increases would be up to 3%
• 4.7% expected to increase wages above 3%

Firms were asked if they will be downgrading or withdrawing employees' benefits:

• 13.5% said bonuses
• 3.2% said gym membership
• 1.6% said other benefits
• 38% said that they never offered benefits
• 43.7% said that they wouldn't be withdrawing or downgrading benefits

Firms were asked about their capacity utilisation in the first three months of 2010:

• 32.7% said that they would utilise more capacity
• 21.8% said that they would utilise less capacity
• 27.6% stated that there would be no change in capacity
• 17.9% stated that they would continue to operate at full capacity

Businesses were asked about their expectations of the cost of finance in the first three months of 2010:

• 42.5% expected it to increase
• 4.7% expected it to decrease
• 52.8% expected it to stay the same

Firms were asked if they were satisfied by the service provided to them by their bank:

• 54.3% responded yes
• 45.7% responded no

The latest BCC Quarterly Economic Survey, which questioned over 5,400 firms and is released on January 12th, will provide a further indication of business conditions going into 2010.