Almost two thirds of all UK internet services companies will not be able to afford next year's salary increases, warns financial analysis firm, Plimsoll.
The company, which recently evaluated the monetary position of some 206 internet services businesses by comparing profitability against expected sales growth rates, claims that of the total, only 77 businesses are strong enough financially to cope with future pay demands.
The analysis also predicts a pay rise of 4.8 per cent next year, which would push the average salary up from £25,000 to £26,200.
"The implications of our findings are serious," comments Plimsoll manager, David Pattison. "It's not often that one sees a statistical result as certain as this, and it is definitely rather sobering for the companies involved."
According to the analysis, the most pressing problem these 129 "lagging" companies face, is their inability to generate good sales-per-employee figures. Adding to their troubles, says the report, is the fact that they record below average salaries, paying on overage just over £21,800 per year, compared to the stronger companies, which average £32,500.
"It is likely that most of the weaker businesses will take action to rectify the situation by trying to ensure that their salary spend for next year is in line with sales," adds Pattison. "But how this action will constrain their business operations remains to be seen."
Just five internet services companies managed to get the balance right last year, says Plimsoll. Their details will be revealed on the Plimsoll website today, although further information can only be obtained by purchasing the report.
This was first published in August 2000