Pay settlements reached a milestone in April, with the median basic pay award safely riding out the strengths and weaknesses of the economy to remain stable for a whole year, according to the independent IRS (Industrial Relations Services), part of LexisNexis UK.
The latest IRS analysis reveals that in the three months to March 2004, the median basic pay settlement - the midpoint in the range - is unchanged at 3%. It has now stood at this level since April 2003.
Other key findings include:
Interquartile range widens. The spread of pay awards has increased slightly according to the latest IRS analysis. The lower quartile, marking the cut-off point for the lowest 25% of awards, remains at 2.8%, while the upper quartile - the top 25% of awards - has risen marginally from 3.4% to 3.5% in March.
Public and private sector awards unchanged. During the 12 months to March 2004, the median private sector pay increase remains stable at 3%. The public sector median over the same period has also stayed constant at 3.5%. Both indicators are now unchanged for an entire year.
Pay deals higher than a year ago. A comparison of a matched sample of settlements from the first quarter of 2004 reveals that more than four in 10 (44%) are higher than in the comparable period a year earlier. Of the remaining deals, 34% are lower than the previous year and 22% are the same.
IRS Pay and Benefits editor, Sheila Attwood said:
ìApril marks the busiest month for pay negotiators in the private sector, as well as the real start of the year for public sector wage setters. An early analysis of pay settlements concluded to date with effective dates in the three months to April 2004 reveals that the median currently stands at 2.8%. However, this is largely as a result of the below-inflation recommendations of the pay review bodies, and as more deals are added to our databank over the coming month, this is expected to move back up to the 3% mark.
ìOur panel of academic and City forecasters are predicting some upward inflationary pressure, but only by a few percentage points, with headline inflation (RPI) tipped to reach 3.2% in the fourth quarter of the year. The fact that RPI is currently running below the forecast level means there is little possibility of it pushing up pay rises in the near future.
ìAverage earnings data is currently showing a markedly different pattern to that of pay settlements. This is because the level of bonuses continues to shape the growth in average earnings. Following a slow start to the bonus-round, when earnings growth fell unexpectedly in December 2003, the January 2004 figures showed that bonuses were back on track and pushing the earnings data up almost one percentage point to its highest level since September 2001. The latest figures show earnings strengthening further, having risen 0.2 percentage points (on the revised January figure) to 4.9% in the February three-month average.î
Happy birthday! 3% is a year old
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