Higher pay awards for private sector staff in 2010 on the cards

Almost half of private sector employers are confident they will be able to offer staff higher pay awards in 2010 than they did this year, according to annual research of pay trends.

However, almost one-third (31%) believed awards would be lower, and one-quarter said deals would stay the same, the IRS annual review of pay trends and prospects, published exclusively on XpertHR, revealed.

The research surveyed 192 companies, employing about 440,000 staff, and identified that the inability of companies to increase the prices of products and services was likely to be the biggest factor influencing their decision to raise pay in 2010.

An increase of 2% was the pay rise cited most often, in relation to 28.1% of employee groups, though one-quarter of employers said staff were in line for a 3% pay boost.

More than two-thirds of those planning to hand out pay rises will use one or more measures of inflation as a guide to work out the level of reward offered. The majority will use retail price index inflation (RPI), currently standing at -1.4%.

Sarah Welfare, XpertHR pay and benefits editor, said employers were uncertain about what 2010 held for them in economic terms.

“While the main message from our survey is that pay rises look likely to be slightly higher next year, many employers are taking a ‘wait and see’ approach, she said. “With inflation forecast to rise, that may help push pay rises up by April, but that depends on the extent of economic recovery.”

General market, economic and business conditions were noted by employers as the most common reason for not making a pay award on the usual date in 2009. Falls in income generation forecast and a drop in demand for products were also common issues for companies.

Tables and charts taken from the IRS annual review of pay awards and pay prospects survey.

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