Private sector organisations predict 2% pay rise

Private sector organisations predict a median pay rise of 2% in the year September 2009 to August 2010, according to research published by XpertHR.

The 2009 IRS Survey of Pay Prospects – based on responses from 192 private sector companies in relation to 403 different groups of employees – found that the median (mid-point in the range) for 2009-10 pay awards was 2%. This figure is lower than the 3.5% predicted last year for the 2009-10 pay round. However, it is slightly higher than the 1.5% median private sector pay award recorded by IRS for the 12 months to August 2009.

Half of all pay increases in 2009-10 are expected to be worth between 1.5% and 3%, while a quarter of employee groups (24.9%) are expected to be awarded a 3% increase.

However, while 273 pay groups (72.7%) were expected to receive a pay award on their normal review date next year, more than a quarter (110 pay groups, or 27.3% of the sample) were unlikely to receive an award at all in the forthcoming pay round.

Taking together the employee groups that were predicted to receive a pay freeze with those that were unlikely to receive a pay award, 32% of all employee groups are unlikely to receive a pay rise next year. And the number of pay groups expected to receive a lower pay rise than the year before has increased from 19.7% last year, to 30.7% this year.

The recession, combined with historically low inflationary pressures and rising unemployment rates, have kept private sector pay settlements low.

The most common reasons cited for not making a pay award on the usual date in 2009-10 included general market/economic/business conditions; fall in demand for products; and to mitigate redundancies.

The key influence on the level of pay awards expected in 2009-10, in terms of both upward and downward pressure, was forecast to be company performance and ability to pay.

Public sector organisations were excluded from this particular pay award analysis as many are subject to differing influences – namely, the role of national negotiations and central government intervention.

Stat of the week

32% of all employee groups are unlikely to receive a pay increase next year.

Source: IRS

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