Almost a third of employers in the UK plan to give workers a higher pay rise next year, but with the economic outlook remaining uncertain, there will be a “tough” climate on wages, according to a new report last Thursday.

A survey by pay analysts IDS found that over half of employers intended to make the same level of pay award in 2012 as they did this year.

Around one in three said pay rises will be higher in 2012, while 13 per cent believed wage increases be lower.

IDS said while the level of pay awards could be slightly higher in 2012, the pace of rises may slow as companies adjust their budgets to the greater uncertainty on the economic front.

The cost of living will play a key role in shaping the pay expectations of workers, said IDS, as well as the “fragility” of the jobs market.

IDS reported that most pay awards were higher this year, with pay freezes falling to the lowest levels since the end of 2008.

Median pay rises this year were running at 2.5 per cent, compared with two per cent last year, with pay awards generally higher in manufacturing than in private services, said IDS.

But most employees have experienced a real-terms reduction in their income because of high inflation and comparatively lower pay rises, said the report.

IDS said a study of 60 settlements in the three months to August showed there had been just one pay freeze in the private sector and three in the public sector.

Ken Mulkearn of IDS said: “Going into 2012, there are conflicting pressures on pay. If the recession recedes, there may be pressure for higher awards, particularly at firms where increases were lower or zero before.

Continued high inflation adds to this pressure, but the ­uncertain economic outlook, and the impact of public sector cuts on both the wider economy and the labour market will make for a tougher climate when it comes to decision-making on pay.

“At a time when the economic backdrop is challenging, ways of using reward to stimulate employees will gain in importance. While some firms may be able to award increases in line with inflation, most will have to be inventive in designing reward packages that achieve the aim of recruiting, retaining and motivating staff.”

TUC general secretary Brendan Barber commented: “While pay restraint could ease slightly in some industries, wages are likely to continue to trail rising prices and further squeeze living standards. Hard-pressed families are set for another tough year in 2012.

“The UK needs wage-led growth, with workers getting a fair share of its benefits, for a sustainable economic recovery.”