IRS monthly UK pay figures

IRS monthly UK pay figures ñ update and IRS assesses the key influences on pay settlements and what the future holds for pay negotiators.


New pay increase benchmark established at 3%

For the second consecutive rolling quarter, the median whole economy pay increase stands at 3%, according to the monthly research from pay analysts IRS (Industrial Relations Services), part of LexisNexis Butterworths.

In the three months to May 2005, the IRS pay databank has recorded a median pay increase of 3%, unchanged from the previous rolling quarter to April.

Pay settlements finally broke the mould by rising to 3.2% in the first few months of the year, against a background of renewed business optimism and higher rates of inflation. With signs that consumer spending is now slowing down, however, many economists have downwardly revised their forecasts for economic growth. Pay setters seem to be on a similar footing and are reining back on the level of increases awarded, observes IRS.

IRS Pay and Benefits editor, Sheila Attwood said:
ìThe IRS data suggests that employers are shying away from pay deals that are well in excess of inflation. For the three months to the end of March 2005, the IRS pay databank indicated that 80% of pay awards were worth 3% or more. In our latest round up, for the three months to the end of May, this has now fallen to 68%. UK pay settlements also remain tightly bunched with few deals at the far reaches of the pay range.

ìHopes of returning to the 3.2% median pay deal seen in the early months of the year have now all but disappeared. And with headline inflation finally making a downturn after holding steady for four months, no further increase in pay settlements is expected this year. All the signs are that pay settlements are following the whole economy into a more subdued period.î

IRS pay databank ñ key findings:
Upper quartile dips. The upper quartile pay award ñ the level at which a quarter of pay deals are the same or higher ñ has dipped slightly, from 3.5% in the previous quarter to 3.4% in the three months to May.

Lowest pay deals steady. The lower quartile pay deal ñ marking the point at which a quarter of pay awards are the same or lower ñ remained steady at 3% for the fifth consecutive rolling quarter. This is the same as the median pay award and demonstrates a clear bunching of pay awards around the median mark.

Awards higher than a year ago. Although the IRS headline measure of pay awards is now at the same level as a year ago, 60% of bargaining groups received a higher award this year than last time around. An additional 23% saw the same pay increase in both years, and the remaining 17% were paid lower increases.

Service and manufacturing awards stable. The pattern of pay stability extends to both the manufacturing and service sectors, where the median pay deal remained unchanged at 3% in the quarter to May 2005.

Public sector awards at 3%. The median basic increase in pay in the 12 months to May 2005 stood at 3% in the public sector.