PAY DATA
Dip in settlement levels masks range of pay outcomes
A detailed analysis by Incomes Data Services of pay decisions made so far in 2009 shows that while the proportion of wage freezes has increased significantly, in line with the altered economic circumstances facing many firms, the changes at the other end of the range of settlements are much less stark. What’s more, across the economy there has been a range of different reactions to the challenges facing firms.
IDS found that the proportion of settlements between 3% and 4% has held up remarkably well, in comparison to 2008, and still stands at over a third of pay awards.
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Pay freezes more widespread . . .
An initial look at awards for the key pay-setting month of April shows that, of the 78 settlements monitored for this month so far, over a third are freezes. IDS says this is the main reason why settlement are running at just 2% overall (as measured by the median level of increase for the month). However, April increases for many large organisations – in both the private and public sectors – are above this level, in some cases significantly.
. . . but other pay responses to downturn now evident
Further from this, IDS also found that across-the-board wage freezes are far from being the only response to the downturn. Hard-pressed firms are reacting in a range of ways, including:
Freezing pay for some higher-paid groups, but not for others.
Continuing to award progression increases to eligible staff, while freezing pay scales.
Continuing to pay bonuses – IDS says: “In the finance sector, while the incidence and level of bonuses to ‘high-flying’ staff have been reduced, bonuses have still been paid to clerical/retail staff”.
Giving additional boosts to the wages of lower-paid staff.
Revising existing flexible working arrangement.
Increasing service-related holiday entitlement as a retention measure.
A final word
“Sometimes summary statistics don’t tell the whole story and this is one of those periods when the broader picture is just as important. On the one hand, those firms most affected by the recession are freezing or pausing pay. On the other hand, a significant proportion of companies are continuing to pay increases, mainly in the 3% to 4% bracket. And the tale is largely one of contrasting sectoral fortunes, with most of the freezes concentrated in engineering and among firms which provide key industrial inputs, such as chemicals manufacturers. By contrast, other sectors, like food manufacturing, pharmaceuticals and retail, have seen fewer freezes.” - Ken Mulkearn, editor of IDS Pay Report.
Want to know more?
Title: “The impact of recession on pay decisions in 2009”, IDS Pay Report 1024, May 2009.
Availability: This fortnightly journal is available on a subscription basis; tel: 020 7429 6800 or order online at www.incomesdata.co.uk/Catalogue/ProductDetails.aspx?recordid=3719&productid=183025.
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.