Employers are keeping a tight rein on pay, but recruitment freezes are starting to thaw and some of the dramatic changes made to working patterns during the recession are now being eased.

Research by the CBI and recruitment experts Harvey Nash revealed today that half of all employers are planning to freeze pay altogether, and that only four per cent plan to make an inflation-beating rise.

And the number of firms operating a recruitment freeze has dropped from 61 per cent in the spring to 37 per cent. This was largely due to firms unfreezing parts of their organisation, and there was far less of a drop in the number of firms who have blocked new hires across the whole business.

The survey also showed that fewer employers see the need for some of the more extreme measures required to control costs earlier in the year, such as extended shut-downs, cuts in overtime, and bringing forward holidays.

However, the CBI believes the spirit of collaboration that forged these changes remains strong and marks a permanent change that will benefit the UK's labour market flexibility beyond the recession.

John Cridland, CBI Deputy Director-General, said: “The worst of the recession may be over but firms remain ultra cautious about increasing pay. Market conditions continue to be very tough and growth in 2010 will be feeble, so pay is going to be squeezed for some time to come.

"As unemployment has risen, businesses and staff across the country have had to adapt to new economic realities. Pay cuts to preserve jobs are part of that reality. Given the alarming state of the public finances we must see similar pay restraint in the public sector.

“The new spirit of cooperation between employers and workers will be a real fillip for UK competitiveness as we return to growth, delivering more flexible working and a welcome improvement in the work-life balance.”

Albert Ellis, Chief Executive Officer of Harvey Nash, said:"This downturn has required tough decisions and strong leadership from managers at every level of every organisation. On a positive note, there have been many examples of employers and employees working together to minimise the impact of the recession on jobs, skills and pay.

"Worryingly, however, there have been some isolated cases recently where executive pay is out of sync with the economic reality and the public mood. In light of the thaw in the recruitment freeze we urge continued restraint on executive remuneration ensuring that a return to sustainable economic growth is not put at risk."