Pay settlements – whole economy

The headline rate of pay deals settled in the three months to the end of April 2009 (latest figures) has fallen back to its lowest level in more than a quarter of a century, according to data collected by pay specialists IRS.


In the final months of 2008, the median pay increase stood at 3.8%. It now stands at just 1.5% – this is the lowest figure recorded since the IRS pay databank was established in 1984.


With many employers struggling to fill order books, the number of pay freezes also remains high at around one in four of all pay settlements normally falling due in the three-month period.


Meanwhile, starting salaries have fallen for permanent and temporary staff for the eighth consecutive month, but there is “more confidence” in the jobs market, according to a report.


The June Report on Jobs by the Recruitment and Employment Confederation (REC) and professional services firm KPMG showed average starting salaries for permanent staff continued to fall for the eighth month in a row in May to reach 40.7, on a scale where 50 means no change, although this was up 0.3 points from April and was the slowest decrease so far this year.


Contract pay rates also dropped for the eighth straight month to 40.6 in May, from 41.1 in April, which REC members’ consultants attributed to supply of temporary workers outstripping demand.


Median pay settlement – whole economy




  • April 2009: 1.5%


  • March 2009: 2.5%


  • February 2009: 2.9%

Source: IRS pay databank IRS monitors 1,400 pay settlements each year The April 2009 figure is based on details of 170 deals reached in April, 221 in March and 205 in February.

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