LONDON, 18 February 2013 – Aon Hewitt, the global human resource solutions business of Aon plc (NYSE:AON), has found that 35% of UK organisations that responded to the Aon Hewitt 2013 Salary Increase Survey - Winter Update, reported that they will either implement redundancies this year or consider introducing them. With the exception of Greece, this is a higher percentage than any other country covered in the overall European study. Of those organisations considering redundancies, over 62% were in service based industries.

Andrew Macleod, leader of Aon Hewitt's pay research practice in the UK said:

"This high potential figure for redundancies may stem in part from UK organisations feeling that they continually have to adapt and reorganise to remain competitive in what is still a volatile economic environment.  By contrast, the same organisations are signalling that increases in salary budgets are holding strong at a rate of 3% - but with marked differences between industries.

"At a sectoral level, it's notable that while the first few weeks of 2013 have featured bad news for some traditional high street stores, over two-thirds of retailers in our survey said that they are actually planning to increase payroll spend and recruitment activity this year. It may be that now rather than all organisations simply reflecting a uniform pattern of overall economic growth and decline, we are beginning to see a more fundamental change in which there are big variations by both sectors and companies as they focus on the three 'R's – recruitment, restructuring and redundancy. "

Andrew Macleod continued:
"We are seeing some mixed messages – and some of them may offer good news to come. The survey findings suggest that the impact of the overall economy will not be as deep as the headline figure on redundancies might indicate. 94% of organisations said that they expect to increase their wage bill or at the very least maintain current spend. Organisations seem to be increasingly aware that they have to ensure that their best people are paid well and get decent salary increases – even if they have to freeze pay generally for their staff."

"Similarly, almost a third of organisations expect recruitment activity to increase this year.  It is also encouraging that only 6% of the UK organisations surveyed are planning a hiring freeze. This is lower than most markets across Western Europe and the lowest figure we have reported for the UK since the beginning of the global economic downturn."

Key points from the survey

• Pay freezes have increased from 7.3% of organisations in 2012 to 13.5% of organisations in 2013.

• Pay budgets are broadly stable (albeit with a slight decline) at 3.0%. This is in line with RPI of 3%.

• Almost half of organisations are now primarily setting their salary budgets in order to remain market competitive. A significant minority (29%) set the budget based on business performance.

• The highest concentration of pay freezes is expected in the Construction and Engineering industries.

• No pay freezes were being considered by organisations within Commercial Real Estate, Pharmaceutical, Energy, Insurance and Food and Beverage industries.

• Only 6% of organisations expect their wage bill to decline in 2013 while 60% expect it to increase.

Media contact: 

Colin Mayes                                                   Adam Leviton
 Aon Hewitt                                                     Capital MSL
 01372 733689                                               020 7307 5339
colin.mayes@aonhewitt.com                      adam.leviton@capitalmsl.com

Notes to Editors

About the survey
The Aon Hewitt 2013 Salary Increase Survey - Winter Update, was run in January 2013. It covers 44 countries, 395 organisations and includes more than 2,145 individual local country data submissions. The UK element of the survey included responses from 255 organisations across a variety of sectors.

About Aon Hewitt
Aon Hewitt is the global leader in human resource solutions.  The company partners with organisations to solve their most complex benefits, talent and related financial challenges, and improve business performance.  Aon Hewitt designs, implements, communicates and administers a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies.  With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to work for clients and their employees.  For more information on Aon Hewitt, please visit www.aonhewitt.com.

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About Aon
Aon plc (NYSE: AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 61,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world's best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon's global partnership and shirt sponsorship with Manchester United.