Pay deals remain static

For the second consecutive ‘rolling quarter’, the median whole economy pay increase stands at 3%, according to research from business analysts IRS.

In the three months to May 2005, the IRS pay databank has recorded a median pay increase of 3%, unchanged from the previous rolling quarter to April.

Pay settlements had risen to 3.2% in the first few months of the year, against a background of renewed business optimism and higher rates of inflation. However, with signs that consumer spending is now slowing down, many economists have revised down their forecasts for economic growth. Pay setters seem to be on a similar footing and are reining back on the level of increases awarded, said IRS.

Key findings include:

  • The upper quartile pay award has dipped slightly, from 3.5% in the previous rolling quarter to 3.4% in the three months to May

  • Lower quartile pay deals remained steady at 3% for the fifth consecutive rolling quarter

  • Although the IRS headline measure of pay awards is now at the same level as a year ago, 60% of bargaining groups received a higher award this year than last time around. An additional 23% saw the same pay increase in both years, and the remaining 17% received lower increases

  • The pattern of pay stability extends to both the manufacturing and service sectors, where the median pay deal remained unchanged at 3% in the rolling quarter to May 2005

  • The median basic increase in pay in the 12 months to May 2005 stood at 3% in the public sector.

IRS Pay and Benefits editor, Sheila Attwood said: “The IRS data suggests that employers are shying away from pay deals that are well in excess of inflation.

“Hopes of returning to the 3.2% median pay deal seen in the early months of the year have now all but disappeared. And with headline inflation finally making a downturn after holding steady for four months, no further increase in pay settlements is expected this year.”

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