December pay deals static at 3 per cent

The latest analysis of UK pay deals reveals that the prolonged period of pay stability continued to the end of 2004, according to the monthly analysis from pay analyst IRS.

The median – midpoint in the range – basic pay deal is 3 per cent for the three months to the end of December 2004, unchanged from the previous 21 quarters.

Alongside this figure, however, there is evidence that some early 2005 pay settlements are bucking the trend of the past 22 months. The first settlements to be concluded in the New Year reveal that the 3 per cent benchmark has been passed.

To date, IRS researchers have found 24 pay deals for January, which range from 2.25 per cent to 5 per cent, with a median settlement of 3.4 per cent – well above the 3 per cent figure recorded by IRS for every quarter since March 2003.

Further evidence of upward pay pressure can be found in the volume of pay deals worth 3 per cent or less. In the three months to November 2004, the proportion of these awards stood at 66 per cent. For the quarter to December, it has dipped to 62.5 percent; for January deals concluded so far it is down to 25 per cent.

Other key findings include:

  • Interquartile range stable – pay deals remain fairly widely spread, with half of all deals falling between 2.5 per cent and 3.5 per cent. The lower quartile remains at 2.5 per cent for the third consecutive month, while the upper is unchanged for the second month at 3.5 per cent
  • Public and private sector deals matched – no change is noted in the value of private and public sector pay deals, which are both running with a median 3 per cent
  • Matched deals show upwards pressure – IRS analysis of a matched sample of pay deals reveals that just over half (53 per cent) are higher than the previous settlement, while one-third (34 per cent) are lower and the remaining 13 per cent paid the same in both years.
  • Weighted median jumps – the weighted median, which takes account of the number of employees covered by individual pay deals, has jumped in response to several above inflation industry-wide agreements.

IRS pay and benefits editor, Sheila Attwood said: “Although these figures should be treated with some caution because of the low sample size, IRS analysis of January 2005 pay deals gives an early indication of future pay trends and provides some evidence that pay settlements are likely to move above 3 per cent at the start of this year.”

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