Confidence ‘improves’ but half of city firms turn to freeze on pay – Survey Results

Confidence ‘improves' but half of city firms turn to freeze on pay - Survey Results

Source Express & Echo 26.03.09

Half of firms in Exeter have either implemented a pay freeze or plan to do so in the next 3 months. 

This is amongst the findings of the latest quarterly survey of members by Exeter Chamber of Commerce, which reveals how the recession is continuing to impact on profit margins and cashflow for employers across the city.

But the poll also found business confidence had improved since December and more firms reported increased sales in the first quarter of 2009 than at the tail end of the year.

A third of firms said they had reduced staff numbers in the past 3 months, reflecting the city's rising unemployment figures, but 9 percent had taken on more staff.

Looking ahead, 15 percent of respondents expect to shed staff while 11 percent expect to recruit.

Profit margins continue to take a battering with 46 percent experiencing a fall in the first quarter, continuing the trend from the 2^nd half of 2008, and only 30 percent of companies polled are operating at full capacity - around half the level this time last year.

Half of those surveyed said cashflow was down on the previous quarter.

Chamber chairman Derek Philips said, "The results are indicative of the national situation, and although the survey has confirmed that Exeter's position is similar to many other cities, there are some promising aspects.

"Chamber members are continuing to invest in the future, with over 68 percent reporting positive plans.  Exeter businesses are investing both currently and for the future, which is probably against the national trend.

"Such investment shows confidence in the city and will be crucial if the Exeter economy is to be ready to take advantage of the opportunities arising as and when the economy upturns."

Some 39 percent of firms surveyed had already implemented a pay freeze, with a further 10 percent expecting to do so in the next 3 months.

But so far, only 9 percent have moved to a shorter working week, with 3 percent admitting they plan to.

Mr Phillips said "Employers are increasingly accepting that there may have to be a pay freeze this year to safeguard jobs, and I think employees and their union representatives are aware of the situation and are working with their employer to ensure that jobs are safeguarded as much as possible."

There was a glimmer of hope with 28 percent of respondents reporting an increase in sales, up from 19 percent in December.

Mr Phillips said: "W are over a particularly difficult period.  The quarter after Christmas is most worrying for retailers because after the surge there's always a fall-back".

Despite the pressures, there was a positive outlook for the future, with 84 percent of members reporting high or medium confidence.

The chamber surveyed around 20 percent of its 460 members, including small, medium and large businesses across a range of sectors.

www.exeterchamber.co.uk