UK pay deals remain buoyant

pay deals remain stable at 2.9 per cent, according to the independent IRS
(Industrial Relations Services) Pay Databank.

research reveals that there has been a clear upturn in deals in the early phase
of the all-important spring bargaining round, with the fall in settlements at
the end of 2002 now appearing to be something of a short-lived blip.

IRS headline measure (the median) is pitched at 2.9 per cent in the three
months to February, unchanged from the previous rolling quarter. 

have responded to the upturn in inflation around the turn of the year, after
easing back to 2.5 per cent in December.

month, settlements mirrored the January headline inflation rate of 2.9 per
cent, and have remained there in February, as inflation ticked up to 3.2 per

key findings include:

Deals in the public sector continue to outstrip those in the private sector. In
the 12 months to February 2003, pay settlements in the public sector were
pitched at 3.3 per cent, unchanged from January’s slightly revised figure. This
compares to an equivalent median pay award of 2.6 per cent in the private

Service sector settlements have rebounded and now exceed manufacturing pay
deals. Settlements in services have jumped from 2.7 per cent in the three
months to January 2003 to 3 per cent in the three months to February 2003,
providing further evidence of the general upturn in awards. By contrast, those
in manufacturing remain constant at 2.9 per cent, meaning deals are now
marginally more generous in the UK’s service sector.

Settlements are higher than during the equivalent period last year. More
evidence of the upturn in pay awards in the early part of 2003 comes from a
matched sample of 39 deals from the same quarter in 2001/02. It reveals that 20
settlements are higher this time round, with 10 lower and nine the same.

IRS Pay and Benefits Bulletin editor, David Carr, said: “At first glance this
hardly suggests that pay settlements are buoyant. However, if you turn the
clock back a few months, wage deals were very weak. And given the weakness of
the economic climate and uncertainties caused by events in Iraq, the recovery
in settlements – first seen in January and now sustained in February – arguably
assumes greater significance.

expect this to continue for the next few months, although with an uncertain
economic outlook, it is unlikely that private sector pay awards will creep
beyond the 3 per cent mark.

the public sector, meanwhile, employees covered by review bodies have been
awarded inflation-rate rises and it is likely this ‘firm but fair’ approach –
as the Government sees it – will extend to other public servants. Indeed, this
April’s 3.5 per cent rise for 1.3 million local government workers – the second
stage of a two-year deal agreed last year – now seems generous."

By Ben Willmott

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