PAY DATA
Pay picture in private sector remains stable with more signs of recovery
Private sector wage awards continue to stabilise as more awards are made at between 2% and 3%, according to the latest analysis of pay settlements from IDSPay.co.uk.
Just over half of settlements are in this range and the median pay settlement level continues to hold at 2%. Higher pay rises at or above 3% have been recorded in both the private services and manufacturing sectors, reflecting the continuing recovery of both. In the public sector, by contrast, the median pay settlement is zero, despite increases for a few key groups under the final years of long-term deals.
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Higher pay expectations in 2011
A broader analysis, for the special IDS publication, “Pay Prospects 2011”, shows:
The distribution of pay settlements has returned to "normal" with more increases between 2% and 3%, and fewer pay freezes.
This pattern is a change from 2009, when the distribution showed two clear peaks, one reflecting the number of pay freezes, and a second for pay rises in the 1.1% to 3% range.
In 2010 the median pay settlement level continued at 2% and while there have been fewer freezes, pay rises are in a much narrower range.
A matched sample of 300 companies’ decisions on pay presents a similar picture, with half of employers not freezing pay in either 2009 or 2010. This confirms that pay freezes were never as widespread as initially portrayed.
Prospects for 2011
Employers will now be looking ahead to pay reviews in 2011. According to a recent survey of reward specialists undertaken by IDS, most employers expect their pay award to be higher in 2011 than 2010. Inflation is forecast to be around 4% between January and April, the key months for employers to review pay, and this will provide an upward pressure on pay.
Many employers have said that employee engagement will be vitally important over the coming year and this may become more important than controlling labour costs.
A final word
“Our latest figures show that as the economy has slowly recovered, there has been a general ‘defrosting’ of pay and benefits across much of the private sector. Higher inflation has played a role too, though affordability still weighs heavily in the balance and has kept most awards below the RPI. However a key question will be whether this ‘unfreezing’ continues into 2011. Inflation is forecast to remain comparatively high, and if the economic recovery continues, pay awards in the private sector could be centred on 3%, with pay freezes at a two-year low.” - Ken Mulkearn, Editor of IDS Pay Report, whose staff collect and analyse the pay settlement 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.
IDS Pay Report, published fortnightly, is the “UK's leading source of research and analysis on pay and benefits across the economy”.
Pay and Bargaining Prospects 2011
This special issue of IDS Pay Report contains analysis of the outlook for pay and conditions over the coming months aimed at helping practitioners plan for pay decisions in 2011.
The report focuses on:
the importance of employee motivation and morale to prospects of recovery
the impact of continued higher rates of inflation, with the latest RPI forecasts from City economists
reward intentions for 2011 including results from its latest subscriber survey which shows most employers expect to pay higher rises in 2011
analysis of key trends in employment and unemployment as the economy emerges from recession.
The issue is available to buy for £100 (inclusive of VAT). To purchase, visit www.incomesdata.co.uk or contact customer services on tel: 0845 600 9355.
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.