PAY DATA
Employers signal pick up in pay deals for 2012, but uncertainty still prevails - CIPD
Forecast pay settlement levels have reached their highest level since spring 2009, according to a survey of more than 1,000 employers commissioned by the Chartered Institute of Personnel and Development.
The CIPD survey asked employers if they planned to increase, freeze or decrease basic pay in the 12 months to December 2012. It found that the expected mean settlement was 1.7%, compared with 1.5% in the previous quarter and 1.3% at the same time last year. This figure is the average across all firms surveyed, and includes pay increases, freezes and decreases. It excludes bonuses, incremental increases, overtime and impact of regrading exercises.
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Charles Cotton, CIPD rewards adviser, said: “While the predicted increases in pay settlements reflects a cautious optimism among members in the private sector that the worst may now be over, uncertainty about how fast the economy will improve is acting to moderate pay forecasts and leading many employers to hedge their bets on the outcome of the final decision. As we move further into the pay round and as organisations get a better idea of how well they and the economy are likely to perform, we should see fewer feeling unable to predict the outcome of their annual pay decisions.
Key survey results
In the private sector, 35% of employers predict a pay rise (unchanged from last quarter), with the average increase creeping up from 2.1% to 2.2%.
Among those planning to increase pay, manufacturing and production firms are forecasting the highest rises (2.9%), followed by those in the service sector (2.7%).
The replacement of a pay freeze with a 1% pay cap in the public sector has seen the proportion of employers forecasting a pay increase in this sector rise from 12% to 30%, with average public sector pay increases jumping from 0.3% to 0.8%.
On average, 16% of all employers predict a pay freeze for the coming year, but this ranges from 9% in the private sector to 40% in the public sector.
Despite the upward movement in pay predictions, the survey also reveals that a level of uncertainty prevails amongst many employers, particularly in the private and voluntary sectors, with 55% and 56% respectively feeling unable to predict the outcome of their pay decision, as it is too early to say.
A final word
“Across all sectors, and whatever pay decisions are predicted, it’s vital that employers maintain an honest line of communication with employees in order to keep staff motivated and engaged; previous CIPD research has shown that employees are satisfied with their employer’s pay decision if their employer has taken the time to explain the rationale behind that decision. The same research also showed that even among those employers that do talk to employees about the basis of their pay rise, few took the opportunity to explain to staff what needed to happen in the next 12 months for staff to get another increase.” - Charles Cotton, CIPD rewards adviser.
Want to know more?
This new pay data is drawn from the CIPD’s quarterly Labour Market Outlook dataset, compiled by YouGov, and based on a survey of more than 1,000 employers across all sectors of the UK economy. The full report is available at www.cipd.co.uk/labourmarketoutlook.
The Chartered Institute of Personnel and Development (CIPD) is “the world’s largest chartered HR and development professional body, setting global standards for best practice in HR”. It has over 135,000 members across 120 countries. For more information visit www.cipd.co.uk.