THREE-QUARTERS OF small businesses in Ireland have frozen basic pay for their employees this year and most of them intend to continue this next year according to new research.

The Small Firms Association is launching its Quarterly Pay Survey results today which show that most businesses in Ireland are continuing to freeze pay with increases only being given as reward for productivity and innovation improvements.

The SFA surveyed 592 companies who employ 12,750 people in Ireland.

In total, 76 per cent of small businesses who responded said that their had frozen basic pay rates this year with 69 per cent saying they planned to continue this next year.

Seven per cent have actually decreased pay by a median of 10 per cent in an effort to save jobs and three per cent expect to do so again in 2012, again by a median of 10 per cent.

There has been a basic pay increase by 13 per cent of small businesses. This increase is by a median of just 2.5 per cent.

However, 22 per cent of small businesses said they expected to increase basic pay by a median of 3 per cent but only if their businesses continued to grow.

Commenting on the results, the director of the SFA, Patricia Callan said:

Basic Pay increases are more likely to occur by exception on productivity and innovation grounds.

Of the companies expecting to implement a basic pay increase in 2011, 56 per cent expect increased productivity in the next three months, 76 per cent expect process improvement, 42 per cent increased workforce flexibility and 69 per cent new product or service development.

She added that “jobs must be top priority” for competitiveness to be restored and that any pay increase implemented must be clearly linked to productivity gains.