Pay settlements static despite uncertain climate

basic pay settlements have remained at 3 per cent throughout the second
quarter, having edged up to this level in April 2003, according to research by
IRS (Industrial Relations Services) Pay Databank.

study reveals that the headline pay settlement measure has been pitched at 2.9
per cent or 3 per cent throughout the year so far, representing a remarkable
degree of stability amidst the uncertain economic climate.

key findings include:

Comparable deals are generally higher than a year ago. A matched sample of 129
basic awards reveals that 72 (55.8 per cent) are higher than their counterpart
of a year ago, 30 (23.3 per cent) are lower and 27 (20.9 per cent) are the

Inter-quartile range narrows. The upper quartile (above which the highest 25
per cent of pay deals lie) is unchanged at 3.5 per cent for the third month

The lower quartile (below which a quarter of awards are pitched) has edged up
by 0.1 percentage point, to 2.7 per cent. This is indicative of a modest
firming of awards at the lower end of the sample and narrows the inter-quartile
range. Half of all settlements now fall in a range of just 0.8 percentage

The weighted median, which takes into account the number of employees covered
by each pay award, remains at 3.5 per cent for the third successive month. A
number of awards made by employers such as BT, several local authorities, a
number of large retailers and those covered by the construction industry
multi-employer agreement account for the weighted median being above the
headline figure.

Public sector deals continue to outpace those in the private sector.

on an analysis of basic settlements in the 12 months to the end of June, the
median public sector award has edged up to 3.5 per cent. This is 0.1 per cent
up on the year to May figure and exceeds the comparable private sector figure
by 0.6 per cent.

Awards made by manufacturers in the three months    to the end of June were pitched at a median level of 3 per cent,
unchanged for the third successive rolling quarter. Meanwhile private-sector
services companies deals were focused around 3.1 per cent, the same as that
recorded a month earlier.

Pay and Benefits Bulletin editor, David Carr said: "At first glance, it
would be easy to conclude from this that we are in a renewed phase of relative
settlement buoyancy. However, while the nominal value of awards has ticked up
since the fourth quarter of 2002, their real (inflation adjusted) value has
been eroded on the back of rising inflation in the spring. In short, the modest
upturn in settlements since the turn of the year is somewhat illusory and has
failed to deliver a real increase in pay for many employees.”

By Ben Willmott

Comments are closed.