PAY DATA
Higher inflation lifts manufacturing pay awards
Inflation is exerting upward pressure on pay settlement levels, particularly in some key industries. The median settlement level in manufacturing continues to rise, standing at 2.9% in the three months to December 2010, according to the latest figures from IDSPay.co.uk.
With the all-items RPI, the measure normally used for pay setting, running at 4.8% in December 2010, almost two-fifths of deals in manufacturing are now resulting in increases of 4% or more. Long-term deals with a direct link to inflation are part of this picture, with over half of manufacturing settlements being awarded under long-term deals in the latest analysis, but new deals are coming in at higher levels as well.
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Meanwhile, in private services the median is lower, at 2.1% over the same period. This partly reflects the impact of the national minimum wage, with many retail organisations following last October’s uplift of 2.2% in 2010. The whole economy measure remained stable, at 2.2%.
January wage round
An early look at settlements effective in January 2011 shows that upward pressures on pay are continuing. Just two of the 25 awards monitored so far resulted in increases of below 2%, with the median pitched at 2.6%.
IDSPay.co.uk says: “Inflation looks set to increase further in the coming months as the VAT rise which took effect at the start of the year comes into the inflation figures. And this could be further fuelled by continued increases in oil prices. With increased media focus on inflation and pay, employees are more aware than ever of the gap between pay settlement levels and RPI, and are likely to put pressure on union negotiators to make up some of this ground in pay negotiations.”
Summary of key settlement data
For the three months to the end of December 2011, based on 53 settlements covering 943,000 employees in total, the key IDS statistics are these:
Whole economy median: 2.2%
Whole economy average: 2.4%
Whole economy inter-quartile range: 2.0% to 2.8%
Manufacturing and production median: 2.9%
Private services median: 2.1%
A final word
“The squeeze in incomes resulting from the sharp rise in inflation means that in many parts of the private sector employees are looking for wage rises to compensate them for cuts in real take-home pay. Our latest figures show evidence of this in manufacturing in particular. Pay growth is more subdued in other parts of the private sector, but the pressures could be reflected in bonus payments over the coming months. It’s a very different picture for the public sector, where a two-year pay freeze is taking hold against a backdrop of startling job cuts.” - Ken Mulkearn, Editor of IDS Pay Report, whose staff collect and analyse the data for IDSPay.co.uk.
Want to know more?
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.
IDS Pay Report, published fortnightly, is the “UK's leading source of research and analysis on pay and benefits across the economy”.
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 details visit www.incomesdata.co.uk.