PAY DATA
Pay awards may rise but will trail inflation
Private sector pay deals in 2011 could well be higher than last year, but they are likely to trail inflation, with the cost of living set to rise faster than average settlements for the second wage round running. IDSPay.co.uk figures show that the median award rose slightly, to 2.2% over the latest rolling three-month period to the end of November 2010. Settlements had been pitched at the 2% mark for most of last year.
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Key statistics
According to the latest pay data from IDSPay.co.uk:
The typical increase is currently in the 2% to 2.99% range, with more than half of awards at this level.
The number of pay freezes continues to fall, with just 6% of recorded settlements resulting in freezes in the three months to November. This is the lowest level since the end of 2008.
An early look at January 2011 pay awards suggests that settlements may be higher in the private sector during the coming year, with 3% emerging as a key figure for decision-makers and union negotiators as inflation persists at relatively high levels.
Although the median level of private sector pay increases has recovered somewhat in the post-recession period of 2010, it has lagged behind the rate of inflation, as this has risen sharply.
The latest forecasts from City experts suggest that RPI inflation will remain above 4% for much of 2011, with the impact from recent VAT and rail fare rises meaning that it could even rise further. This is likely to put upward pressure on private sector pay awards.
The majority of employees are unlikely to receive pay increases that match rises in the cost of living.
Public sector employees face much-publicised freezes in basic pay across most departments and employee groups.
IDS has now recorded 10 pay freezes in civil service departments, although in line with government policy there have been some modest rises for employees earning £21,000 or less.
Pay progression arrangements vary from department to department, meaning that in some workplaces a proportion of eligible employees can still receive an increase even where basic pay has been frozen.
A final word
“Private sector pay settlements could well rise in 2011, under the influence of higher inflation and the tentative economic recovery. But the increase in the cost of living, especially after rail fare rises, and the increase in VAT to 20%, means that most employees’ pay will be chasing inflation. Meanwhile in the public sector, the government’s pay freeze policy means that staff salaries there will fall even further in real terms.” - 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.