Almost a fifth of employers have instituted pay cuts since the pandemic hit and nearly a third of the remainder are prepared to do so, according to a survey of managers across the country.
Eighteen per cent of 932 members of the Chartered Management Institute (CMI) in an exclusive survey for The Times said that staff pay cuts had been made in their organisations.
Thirty per cent of organisations where pay cuts had not been made would still consider it if it was necessary for their survival.
Fifty two per cent said their organisations would not make pay cuts in any circumstances.
The poll also found that extending the furlough scheme was the most popular measure among managers for options the government had to ease pressure on employers.
Ann Francke, chief executive of the CMI, warned that pay cuts may be unavoidable: “So far most businesses have been able to avoid pay cuts by careful planning around government support, like the furlough scheme. If the government goes ahead with withdrawing the scheme, those businesses, especially in hard hit sectors, may find their position becomes unsustainable.”
The furlough scheme, in which the government shoulders a share of workers’ wages, is being phased out and will be completely withdrawn at the end of October.
Pay for many businesses is their single biggest cost. Total average pay fell 1.8 per cent between the three months to April and the three months to July when adjusted for inflation, according to the Office for National Statistics.
A second lockdown was by far the biggest economic concern identified by respondents, with 63 per cent citing it, though 27 per cent said that a no-deal Brexit on December 31 was a bigger worry.
The poll of managers was conducted between the September 15 and 18.
Respondents included a mix of managers from small and large businesses and from the public as well as the private sector.
Asked to rank their biggest management concerns, respondents said reduced customer demand, followed by motivating staff working from home and implementing social distancing in the workplace.
Twenty-five per cent of managers called for an extension to the furlough scheme, and 21 per cent for tailored concessions for specific industries; 17 per cent suggested a temporary cut in VAT, 11 per cent suggested a reduction in employers’ national insurance and 7 per cent called for a further holiday on business rates.
Sixty-one per cent of managers said their organisation had been treated fairly by their bank during the crisis, while 6 per cent said it had not. Asked the same question about their treatment by commercial landlords, 33 per cent said they had been supportive while 13 per cent said they had not.
According to the ONS data, pay fell most significantly in the construction sector, where it was down 7.5 per cent in the July quarter, and in the hotel, restaurant and retail sector, where it fell by 3.2 per cent.
While employers are reluctant to worsen the terms and conditions of existing staff, many are hiring new staff on inferior rates to the people they replace, according to recruitment consultants.