PAY DATA
Companies predict same or higher pay awards in 2012
More than half of HR professionals in "leading UK firms" surveyed by IDS intend to make the same level of pay award in 2012 as they made this year. But almost a third indicated that pay deals will be higher in 2012. Only 13% reported that they would make a lower award.
In its analysis of pay trends in the latest wage round, IDS concluded: “A tentative economic recovery and high inflation this year had an effect on pay outcomes, with most awards higher than last year and the proportion of pay freezes falling to the lowest levels since the final quarter of 2008. The median increase for 2011 was 2.5%, compared with 2% for 2010. And pay awards have generally been higher in manufacturing than in private services.”
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However, most employees experienced a real-terms reduction in their income as a result of the combination of high inflation and subdued pay rises. As IDS explains: “In large measure, this has been due to the post-recession context as well as the continued weakness of the labour market and its effect on the bargaining position of employees.”
These findings are taken from a special issue of IDS Pay Report published this week, entitled “Planning for reward in 2012”. Some 83 HR specialists in UK firms responded to the survey.
Key findings
Other findings include the following:
Most firms continue to use the all-items RPI rather than the CPI as their main measure of inflation for pay-setting purposes.
Forecasts from City economists indicate that the RPI is set to remain above 5% for the rest of 2011, before dropping back to around 4% early in 2012
With pay budgets under pressure, companies will have to be inventive in how they design and present their reward packages in 2012.
Summary of key settlement data
The special report also contains analysis of the current picture on pay settlements. For the three months to the end of August 2011, based on 60 settlements covering 565,524 employees in total, the key IDS statistics are these:
Whole economy median: 2.5%
Whole economy average: 2.5%
Whole economy inter-quartile range: 2.0% to 3.0%
Private sector: 2.5%
Manufacturing and production median: 2.8%
Private services median: 2.4%
A final word
“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.’ - Ken Mulkearn, Editor of IDS Pay Report, whose staff collect and analyse the data for IDSPay.co.uk.
Want to know more?
Title: “Planning for reward in 2012”, IDS Pay Report 1082, October 2011.
IDSPay.co.uk is an online source of all the remuneration data collected by IDS, on pay settlements, pay levels and executive compensation. Visit www.IDSPay.co.uk to see a demonstration or to sign up for a free trial.
IDS Pay Report, published fortnightly, is the UK's “leading source of research and analysis on pay and benefits across the economy”. For details visit www.incomesdata.co.uk or tel: 0845 600 9355.
Incomes Data Services is the “leading UK information and research service on employment issues, providing a range of publications for employers, trade unions, government departments and other agencies”. For more information visit www.incomesdata.co.uk.