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Below-inflation pay rises raise a new set of challenges for employers

New figures show that average pay settlements look set to remain in the 2-3% bracket, trailing far behind inflation. How can employers manage expectations around pay and reward packages and avoid losing staff?

The figures, based on research conducted by five pay research organisations to the end of November 2011, all show a similarly bleak picture across a broad range of sectors. Recent research by independent price comparison and switching service uSwitch also suggests that two-thirds of workers in the UK are not expecting a pay rise at all this year. Last year's CIPD's Reward Risks survey highlighted concerns over retention, with 78 per cent of reward professionals surveyed expressing concern that their companies risked losing employees as a result of insufficient reward packages.

Many employers will now have to work hard to maintain 'positive' perceptions of pay packages among employees, while at the same time restructuring reward around new business strategies and austerity measures. It also pays to investigate cost-effective ways of providing benefits to staff to help maintain morale during these difficult times. Affinity benefits such as discounted goods and services, for example, can help offset the combined effects of pay freezes or below-inflation rises, commuter fare hikes and increases in energy bills.

Acas can visit yourorganisationto help you understand what needs to be done to address issues related to pay  and then work with you to develop practical solutions.

Visit the Acas training and business solutions area for more information.

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