Median pay deals expected to stick at 3.5% for 2007

The median UK pay settlement was 3.5% in the first quarter of 2007, according to the latest statistics from pay specialist Industrial Relations Services (IRS). Against a backdrop of successive increases in retail prices inflation (RPI) –  which reached 4.8% in March – pay awards have maintained this 3.5% benchmark in 2007 so far, up from the 3% level recorded for almost every rolling quarter during the three-and-a-half years to the end of 2006.

IRS researchers collected details of 261 pay awards covering 273,397 employees. Of these, 206 deals include an identifiable increase in basic pay.

Public sector deals remain lower than those in the private sector. The divergence between public and private sector awards continues, with public sector deals worth a median 2.9% in the 12 months to March 2007 compared with a median 3% in the private sector over the same period.

IRS Pay and Benefits editor, Sarah Welfare said: “Pay awards for 2007 so far have maintained their eight-year high, with manufacturing employees benefiting most from bigger pay rises.

“Over the next few months we expect to see public sector pay awards falling behind those in the rest of the economy. Private sector deals look set to remain on the high side because of successive increases to RPI inflation, but this will depend on the ability or willingness of companies to fund higher pay awards.”

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