Pay increases are stuck firmly at the 2% mark, says XpertHR

PAY DATA

Pay increases are stuck firmly at the 2% mark, says XpertHR

Basic pay awards remain stuck firmly at 2%, according to the latest analysis from pay specialists XpertHR. The latest figures cover the three months ending 30 November 2011, with XpertHR’s headline measure unchanged for the eighth consecutive rolling quarter.

Included in the analysis are a batch of awards affected by the national minimum wage – which saw a 2.5% increase to the adult rate from 1 October. The sample includes six major retail companies that awarded a 2.5% increase to all staff – but also several others that have applied the 2.5% increase to their lowest grades only. Among this latter group, some have frozen all except the lowest rates, while others have applied lower increases for higher paid employees.

Pay deals in the manufacturing sector continue to outpace those elsewhere in the economy. The median manufacturing settlement stands at 2.5%, compared with 2% in the services sector.

The research is based on the details of 73 pay awards settled in the three months to the end of November 2011.

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Pay awards lag inflation

Pay awards continue to fall well below the level of inflation. During 2011, retail prices index (or RPI) inflation is expected to average 5.3%, but just 2% of 2011 pay awards on XpertHR's database of almost 1,400 awards were at or above this level. So 98% of pay awards didn't keep pace with prices during 2011. Although RPI inflation is expected to fall to an average 3.5% over the course of 2012, pay settlements are again unlikely to outstrip inflation.

A final word

"Although inflation is set to fall further in the New Year, it will remain at a level that is unattainable for most employers to match in pay packets. We expect to see improving pay settlement levels in 2012, but pay rises will continue to lag inflation." - Sheila Attwood, XpertHR Pay and Benefits editor.

Want to know more?

Title: “Pay review update”, IRS Employment Review, 16 December 2011.

Availability: The report is available on a subscription basis. To subscribe to XpertHR visit www.xperthr.co.uk/article/111410/pay-review-update--16-december-2011.aspx?mid=42.

XpertHR collects details of pay settlements for around 1,400 employee groups each year. Its database contains more than 28,000 settlements. For more details visit www.XpertHR.co.uk.