UK pay deals rise to 3 per cent

UK
pay deals rose to 3 per cent in the three months to April, up from 2.9 per cent
in the previous rolling quarter, according to research by IRS (Industrial
Relations Services) Pay Databank.

After
jumping from 2.5 per cent in December 2002 to a revised figure of 3 per cent in
January 2003, the IRS headline measure of basic wage deals (the median) was
pitched at 2.9 per cent in February and March.

The
increase to 3 per cent in April in part reflects rising inflation, with
settlements largely following – with a time lag – uplifts in the Retail Price
Index.

Other
key findings include:

Upturn
in pay awards maintained into spring


While settlements from January have dropped out of the rolling quarterly
sample, those from the key month of April feature strongly. The 51 basic awards
with April effective dates are also clustered around a median level of 3 per
cent. This indicates that the upturn in awards seen since the end of last year
has been maintained into the spring

Interquartile
range has widened


The upper quartile – marking the cut-off point for the highest 25 per cent of
deals – now stands at 3.5 per cent, up by half a percentage point from March. A
quarter of all basic settlements are pitched below 2.5 per cent – the lower
quartile, unchanged from March. Half of all settlements are now pitched between
2.5 per cent and 3.5 per cent – the widest band recorded since June 2002

The
weighted median has risen sharply


The weighted median, which takes account of the number of employees covered by
each pay review, has jumped by one percentage point to 3.5 per cent. This
largely reflects the impact of several local authority settlements, effective
from April

Public
sector deals ease


The Government’s “firm but fair” policy on public sector pay has resulted in
median basic awards in the sector dropping from 3.4 per cent in the 12 months
to March to 3.3 per cent in the year to April. However, public sector deals
remain ahead of those in private companies, which stand at 2.8 per cent over
the comparable 12-month period

Services
remain ahead of manufacturing


Pay settlements in the manufacturing sector eased down by 0.2 percentage points
to 2.5 per cent in the three months to April. Meanwhile, service sector deals
stand at 3 per cent for the fourth successive month

IRS
Pay and Benefits Bulletin
editor, David Carr, said: “April is always a key
month in the bargaining calendar and overall, the latest comparable deals are
higher than a year ago. Looking forward, a continuation of high and steady
demand for labour suggests that settlements will remain close to current levels
in the short term.

"Next
year, the level of inflation and the degree to which it is impacted by the
current weakness of sterling will become the key variable to be watched by all
those engaged in pay negotiations.”

By Ben Willmott

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