Pay settlements increase to 3.3%

UK pay awards for the first quarter of the year remain steady at 3.3%, but there are signs that April deals will not be so generous, according to the monthly analysis from pay analysts IRS.

The median pay award remains unchanged from the IRS whole-economy figure for the three months to the end of February 2005.

Looking at the April 2005 pay deals within the IRS pay databank, there is already an indication that employers are reigning back, and the expected fall in headline inflation can serve only to cement this trend.

Other key findings include:

  • The top 25% of pay awards and the bottom quarter of deals were both static in the three months to the end of March, at 3.5% and 3% respectively
  • Pay settlements in the 12 months to March 2005 remain at 3% in both the public and private sectors
  • Pay awards in the manufacturing sector remain unchanged in March for the third consecutive month. The median basic pay deal has now stood at 3.2% since the rolling quarter to January 2005
  • Pay deals in the service sector remain just ahead of those in manufacturing, at 3.3% for the three months to March, unchanged from February

While most pay awards (56%) continue to be paid at a higher level than that received by the same bargaining group the year before, this marks a fall from the 66% receiving higher awards in the quarter to February. Just over 20% of settlements were each worth the same, or less, than the previous year.

IRS Pay and Benefits editor, Sheila Attwood said: “While the IRS settlement measure remains at a six-year high, the economic outlook suggests that downward wage pressures will intensify in the months ahead.

“Headline inflation remained steady at 3.2% in March, leaving it unchanged for three months. But, the increase in the retail prices index is set to slow over the course of this year, with the IRS panel of economic forecasters predicting it will dip to 2.7% by the summer and 2.4% by the end of the year.

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