Pay awards fall further behind inflation

Pay settlements are currently running 0.6 percentage points below the increase in prices, according to pay specialists Industrial Relations Services (IRS).

Analysis of the latest pay settlements reveals that basic pay awards are at a median 3% in the three months to the end of September 2006, while the retail prices index (RPI) inflation measure stood at 3.6% over the same period.

IRS pay researchers have collected the details of 99 pay settlements, covering 711,629 employees. Of the total, 83 of these pay awards give a basic pay increase.

IRS pay databank ñ other key findings include:

Median holds steady at 3%. Provisional analysis of settlements on the IRS pay databank reveals that the median ñ midpoint in the range ñ basic pay deal remained at 3% for the three months to the end of September 2006.
Spread of pay awards remains narrow. Half of all pay awards are worth between 2.5% and 3%.

Public and private sector awards matched. There is no variation between the level of pay awards in the private and public sectors, which are both worth a median 3% in the 12 months to the end of September 2006.

Over half of pay awards lower than a year ago. Of the 41 pay awards for which we have matched data, the majority ñ 25 pay deals or 61% ñ were lower than they were a year ago for the same group, with only six awards (15%) higher and 10 (24%) worth the same.

Manufacturing and service sector awards even. The median pay award in the manufacturing sector stood at 3% in the three months to September 2006, the same as the service sector median over that period.

Merit awards higher in value than basic awards. A separate analysis of the small sample of 19 pay awards based solely on merit or performance reveals that the median paybill budget increase stood at 3.5 %, up by 0.2 percentage points from the median 3.2% paybill increase recorded in the three months to August.

IRS Pay and Benefits editor, Sheila Attwood said:

ìWe are continuing to see an enduring stability in the level of pay awards. However, inflation rose once again in September 2006, and employee-side pay negotiators will be looking for the increase in prices to be fed through to pay rises, especially during the crucial January bargaining period.î