The number of pay freezes has increased in recent months, with one in three firms now holding back from giving their staff a wage rise, new figures have revealed.
A study of 145 settlements in the three months to April revealed that average settlements had fallen sharply from 3% to 2%, largely because of the rise in the number of workers facing a pay freeze.
Incomes Data Services (IDS) said its study showed freezes were common in manufacturing, but least likely to be imposed by finance firms.
A separate study of management pay deals showed average awards in private firms of 1%, down from 2.4% at the start of the year.
Ken Mulkearn of IDS said: "Following the delayering of the early 1990s recession, few firms have much spare capacity left to cut. As a result, many organisations are seeking to minimise redundancies and hang onto staff in the hope of an economic recovery.
"In this context, pay freezes, and even temporary pay cuts such as that recently agreed at Honda, are part of a strategy to avoid redundancies wherever possible. In those parts of the economy most affected by recession, the focus is on negotiation to mitigate its effects.
"The contrast with finance shows that pay freezes aren't the whole picture. If anything, the idea that most private sector firms are freezing or cutting pay is a current form of urban myth.'
Steve Tatton of IDS added: "This quarter's figures are characterised by a high proportion of pay freezes, although it is not clear whether this is a fully accurate reflection of events or more a product of employers' willingness to share this information.
"What is clear however, is that with or without pay freezes, employers are bearing down hard on pay budgets for managers as they attempt to ride out the recession."
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TUC general secretary Brendan Barber commented: "These figures blow apart the myth that wage cuts and freezes are becoming the norm. Despite the economic gloom, many UK companies are performing well and rewarding staff for their efforts."
