PAY DATA
IDS looks at pay and bargaining prospects for 2008
In 2008, the majority of private sector pay increases are expected to range between 3% and 4.5%, while those in the public sector will be restricted to a lower, narrower spread of between 2% and 2.5%. These are among the key points published in a recent analysis of current and forecast pay increases by Incomes Data Services in a special report on wage and bargaining prospects for 2008.
This public-private sector pay gap could have important implications for the future warns the IDS report. In particular, it says that 2008 will be a challenging time for pay determination for publicly-owned organisations with the Treasury’s 2% pay policy likely to be tested.
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Looking back to the spring of 2007, for example, the independent Pay Review Bodies awarded increases based around a 2.5% recommendation having been persuaded by the government to keep their recommendations low but what resulted were even lower awards. This was because the Treasury staged the increases and if this is repeated in 2008, IDS warns there could be even stronger opposition from public sector unions who are already questioning the degree to which the Pay Review Body process is independent of government policy.
Public sector restraint could widen gender pay gap
IDS also makes the point that current Treasury policy restricting public sector pay increases to 2% will have the effect of undermining other aspects of government policy as it is likely to lead to a widening of the gender pay gap.
Women make up 77% of the NHS workforce, 73% of the local government workforce and 70% of school teachers. An incomes policy which applies to the public sector alone would therefore have the effect of curbing pay for women and thus widening the gender gap.
Both 2007 and 2008 increases examined
The report also looks at pay rises that took place in 2007 commenting that settlements in manufacturing have been strong with a median increase of 3.5% and a third of rises at or above 4%. A similar pattern is expected for the forthcoming year and if inflation turns out as predicted, RPI-linked long-term pay deals, common in the sector, will yield a median pay settlement level of 4%.
In contrast, in financial services, variable bonuses will be down in 2008, but that will put upward pressure on basic salary rises which have been modest in the context of high bonuses in the last two years. As recorded in the IDS pay databank, the median increase in financial services in 2007 was 3.7%, with an upper quartile of 4.1%. Increases in 2008 are expected to be of a similar order.
Inflation forecasts
Also included in the report is a fresh round-up of City forecasts for RPI inflation which shows the rate is likely to settle at around 4% in the last months of 2007, the time that companies are setting their pay budgets for 2008. RPI inflation is forecast to nudge down towards 3% by the spring of 2008. Much of the year’s pay bargaining is conducted in the first five months of the year and the inflation background for this period will be in the range of 3% to 4%.
Want to know more?
Title: Pay and Bargaining Prospects 2007/08, Incomes Data Services.
Availability: From the IDS web site at www.incomesdata.co.uk or call customer services, tel: 0845 600 9355 or email: sweetandmaxwell.customerservices@thomson.com. Price is £95.
IDS is a leading UK information and research service on employment issues, providing a range of publications for employers, trade unions, government departments and other agencies. Find out more at www.incomesdata.co.uk.