Pay awards move higher but still lagging behind inflation: IDSPay.co.uk

PAY DATA

Pay awards move higher but still lagging behind inflation: IDSPay.co.uk

Pay settlements have reached their highest level since the summer of 2012, according to the latest analysis from IDSPay.co.uk. Pay deals reached 2.5% for the three months to the end of January 2013, an increase of 0.5 percentage points on the previous month.

IDSPay.co.uk said: “January is a key pay setting period for much of the manufacturing and production sectors, while the figure for the previous three-month period was influenced by lower awards in the retail sector.”

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Key findings

• A third of all awards recorded in the three months to the end of January are between 3% and 3.99%, up from 18% of all settlements recorded in the previous three-month period.
• The majority of these settlements are in the automotive, engineering and chemical manufacturing sectors. Several of these are the result of the implementation of the final stages of long-term pay deals. Some long-term deals, especially in the engineering sector, include formulas linked to RPI inflation.
• The most common level of award recorded in the three months to January is 3%. This is closer to, but still below, the RPI measure of inflation, which stood at 3.3% in January.

Summary data

For the three months to end of January 2013, based on 48 settlements covering 639,400 employees in total, the median settlement figures are:

• Whole economy: 2.5%
• Private sector: 2.6%
• Manufacturing and production: 2.6%
• Private services: 2.8%

A final word

“The difficult economic situation is the main obstacle to stronger pay growth. When it comes to pay rises, 2% represents a floor for most companies, with those in serious economic difficulties opting for freezes. But it’s also striking that 3% is the single most common figure for settlements. This isn’t far off the latest RPI inflation figure, though the fact that this remains above 3% means the squeeze on employees’ purchasing power continues. While the economy is the main focus, bosses and workers alike will be keeping a close eye on the cost of living over the coming months.” - Ken Mulkearn, Head of Pay and Research, IDS.

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 to see a demonstration or to sign up for a free trial.

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.