Pay deals settle around 3% mark

UK pay deals have settled back into a familiar trend, with rises of 3% dominating the pay settlement chart, according to the monthly research from pay analyst IRS.

In the three months to 30 June 2005, the IRS headline measure of pay awards – the midpoint in the range of basic increases – stands at 3%, unchanged for the third consecutive rolling quarter. With headline inflation also unchanged at 2.9% in June, basic pay awards continue to hover just above the increase in prices.

Other key findings include:

  • Pay awards are tightly bunched. The lower quartile pay increase has increased slightly (on the revised May figure) to 3%. This is now at the same level as the median pay rise and demonstrates the bunching of pay increases around the median

  • Awards are higher than a year ago.  Six out of 10 pay deals in the past quarter were worth more than in the previous year. About one in five paid the same increase, while 17% were lower than a year ago

  • Service and manufacturing awards are in check. Pay rises in the manufacturing and services sectors are still running neck-and-neck at 3% in the three months to June

  • Public sector awards are in line with whole economy. In the year to June, the median basic pay increase for public sector employees remained unchanged at 3%.

IRS pay and benefits editor, Sheila Attwood, said: “Employers and unions settling in to pay negotiations now are working under a slightly different bargaining environment to those concluding deals in the earlier months of the year.

“For those pay-setters concluding deals in the second half of the year, the outlook is for headline inflation to fall further as we head to the back end of the year. It is unlikely that pay rises are going to overshoot the 3% mark again before the year is out.”

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