KEY POINTS:
The rate of wage increases is slowing and will likely get worse over the coming months as the recession bites.
A survey by the Employers & Manufacturers Association found average wage increases had dropped to 4 per cent from 4.76 per cent at the end of 2007.
EMA
Northern employment services manager David Lowe said businesses were trying hard to retain employees, with the memory of skilled-worker shortages fresh in their minds.
"Just a couple of months ago it was difficult for businesses to find staff and they don't want to do anything to lose the very people they've worked hard to find," said Mr Lowe.
But he said it would become more common for companies to postpone wage increases as salary review dates rolled around next year.
"We're more likely to see postponement of salary increases as opposed to giving people nothing," he said. "That's yet to come through because there are common dates for salary reviews like 1 April and 1 July and we haven't had those two dates come through in the current economic circumstances." However, he said the majority of businesses were confident of making it through the recession.
Redundancies have grabbed the headlines as companies try to stave off the effects of a slowing economy and less consumer spending.
Recruitment firms, unions and employers' associations are also warning that salary increases are harder to come by and many employees expecting end-of-year bonuses may be disappointed.
George Brooks, chief executive of OCG Consulting, said there was an "emerging trend" of companies considering across-the-board salary cuts to avoid redundancies.
"There is a growing conversation around not just freezing wages but in the professional areas perhaps looking at cutting them back a touch," he said.
"In some cases it allows you to preserve more than you would with redundancies. It's a tool for fewer redundancies or even none, and it's an approach a lot of medium-sized enterprises are taking."
Mr Brooks said many companies were not hitting the sales and marketing targets they based their end-of-year bonuses on, and that would also mean little new-year cheer for some employees. "December-January is a very tough time for any company in terms of cash flows and trading and I think you'll see in February, March and April a lot more of this type of conversation happening."
Business NZ chief executive Phil Reilly said wage expectations were "moderating quite quickly" and target-linked bonuses were becoming more rare.
"A year ago we were still very bullish about bonuses but this year I suspect many of the targets on which they are based won't have been met."
