Pay deals start to pick up

Pay
settlements appear to have found an inflationary ‘spring in their step’, with
most awards now ahead of the equivalent pay deals from a year ago, the latest
research reveals.

A
study by IRS (Industrial Relations Services) Pay Databank, published by LexisNexis
finds settlements are now back in line with the rate of inflation.

The
IRS headline pay figure (the median) stands firmly at 3 per cent among basic
awards with effective dates in the three months to the end of May 2003.

Other key
findings include:

– Pay deals are on an even
keel. With the IRS headline measure of basic pay awards (the midpoint in the
range) standing at 3 per cent, awards have now hovered between 2.9 per cent and
3 per cent for the past five months

– Matched pay
awards are well ahead of a year ago. Comparing a sample of 106 basic pay deals
effective in the latest rolling quarter with their counterpart a year ago, it
appears that a clear majority (55.7 per cent) are higher than last time round

– One settlement
in five (20.7 per cent) is running at the same level, while the balance of
deals (23.6 per cent) are lower than a year ago

– Half of all
deals are worth between 2.5 per cent and 3.5 per cent on basic rates. The upper
quartile (the cut-off point for the highest 25 per cent of pay deals) has
consolidated at 3.5 per cent the same as last month

– A quarter of
basic deals are pitched at 2.5 per cent or less (the lower quartile), again
unchanged from last month.

– Major
employers tend to make the highest awards. When our basic deals are weighted to
take into account the workforce covered, the median stands at 3.5 per cent for
the second successive rolling three-month period

 A handful of telecommunications, public
sector and retail deals account for this trend

– Public sector
deals have eased, but still exceed private sector awards. Public sector pay
deals in the 12 months to the end of May are worth 3.4 per cent at the median,
down slightly on a [revised] 3.5 per cent figure for the year to April. By
contrast, pay deals settled by private employers stand at 2.9 per cent over the
same 12-month period, unchanged on April

– Private
sector pay deals are currently equal to the whole-economy figure of 3 per cent.
Among deals struck in the three months to the end of May, IRS data shows a 3
per cent mid-point among the 108 monitored private sector basic settlements.

Manufacturing
and service sector pay deals are running almost neck and neck. In the three
months to the end of May, pay awards in both areas showed a slight upturn,
settling at 3.1 per cent in services (93 deals) and at 3 per cent in
manufacturing (35 deals).

IRS Pay and
Benefits Bulletin editor, David Carr, said: "The key influences on
decision-makers in the coming wage round are the two hardy perennials of
company performance and changes in the cost of living.

"While pay
rises have now caught up with inflation, the prospects for settlements rising
much above 3 per cent remains dependent on a sustained upturn in the economy.”

By Ben Willmott

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