© Press Association 2010 »

EMPLOYERS are more optimistic about the economic outlook this year, with most planning to spend less time cutting costs than they did in 2009, according to a new study.

A survey of 800 employers showed one of their top priorities now was making sure reward packages they offered were market competitive.

Minimising costs was still a top priority, but of equal importance was making sure pay rates were fair, said the Chartered Institute of Personnel and Development (CIPD).

Just over half of those questioned said they expected to pay more in salaries this year, with only 15% predicting a cut.

Employers in the public sector were more likely to predict a cut in their salary bill compared with private firms.

Charles Cotton of the CIPD said: "The survey results show a distinct shift in the approach to reward. Employers seem more confident about the economic outlook in the months ahead and have refocused their thinking with that in mind.

"Many will be going back to the drawing board to revisit their reward strategies in the wake of the recession and may be keen to link pay more with performance.

"The rise in the number of employers increasing the pay award differentiation confirms that employers want to ensure that whatever profits they reap in 2010, a better proportion should go to those who have added the most value."

An increasing number of firms responded to limited resources by introducing recognition schemes such as an employee of the month, the study showed.