Half of businesses intend to freeze pay and a fifth cut jobs in the year ahead as eurozone woes blight confidence, new research shows.
Stagnant growth in the economy and two consecutive quarterly falls in GDP has led to employers cutting back their hiring plans, with 19pc likely to make staff redundant in the next 12 months and further 20pc unable to rule out job cuts, the study by Irwin Mitchell, the law firm, revealed.
The majority of employers – 61pc – said it was unlikely they would shed jobs over the next year, however, with fewer firms planning redundancies than last year, the study of 323 companies found.
But the research showed half of businesses are planning pay freezes to save costs in the year ahead, up from 41pc last year.
Tom Flanagan, employment partner at Irwin Mitchell, said: “There appears to be a huge amount of uncertainty in relation to job cuts at the moment. Almost 20pc have nailed their colours to the mast and stated they will cut jobs.
“A slightly larger proportion of businesses are unsure – certainly indicating growing unease. I think it’s highly likely that this uncertainty will translate into job cuts and headcount reductions will be higher than they have been during the previous eight quarters.”
A growing number of employers are considering alternative ways of saving money rather than redundancies, such as outsourcing loss-making services, cutting down on the use of agency workers and removing benefits, such as bonuses.
One in 10 companies plans to reduce staff salaries, a similar number to last year, with 17pc looking to reduce staff hours to save costs.
However, almost half (43pc) of businesses would have restructured their businesses differently over the past two years, with many “regretting” that they did not reduce wages more or cut management structures more deeply.
Businesses felt they didn’t react quickly enough when it came to making tough decisions, the study said.
Mr Flanagan said: “It does make you wonder what more could have been achieved if firms had used more of the techniques at their disposal and reacted more quickly. It’s telling that only just over half said they would restructure in the same way given the opportunity again.”