Pay awards end 2009 at 1.2%

Pay awards staged a slight recovery in the closing months of 2009, with the headline award standing at 1.2%, according to latest data from IRS for XpertHR.

However, the pay outlook is uncertain: pay awards could either stage a further weak recovery in 2010, or slump back to zero.

These findings are based on details of 73 pay awards concluded over the three months to 31 December 2009, covering 635,113 employees. Of these, 67 provide for a basic pay increase.

Final IRS pay data for 2009 reveals the following:

• The median basic pay award was 1.2% in the three months to 31 December 2009, down slightly from 1.3% in November. The headline pay award has now been worth 1% or more for four successive rolling quarters.
• The range of pay settlements was low and stable. The lower quartile of nil and the upper quartile of 2% have remained unchanged since the three months to May 2009.
• Almost all pay awards are lower than a year ago.
• To some extent pay awards have rebounded from the all-time low of zero recorded in July and August 2009. But the 1.2% headline award is worth less than one-third of its value a year ago (3.7%).
• A breakdown by sector reveals a stark divide: the private sector median was 1% over the 12 months to December 2009, one percentage point below the headline public sector pay award (2%).
• The whole economy headline pay award for the 12 months to 31 December 2009 was 1%.

The outlook for 2010 pay awards is uncertain:

• Many 2010 public sector pay awards will be subject to the 1% limit announced by Alistair Darling in the Pre-Budget Report 2009.
• Weak economic recovery and ongoing high unemployment could exert downward pressure on private sector pay. But employees may be unwilling to accept pay freezes for two years running.

Click here to read more from this survey.

Click here for the 2010 pay outlook video.

Click here to take part in the rolling pay awards survey from IRS