Pay awards fall to six-year low

The median basic pay award has fallen to 2.6% in the three months to the end of February 2009. The figures released today by Industrial Relations Services (IRS) show the economic downturn clearly feeding into pay packets.

Most telling among the pay deals collected this month is the first pay cut recorded by IRS for this recession. This is accompanied by numerous pay freezes, and companies deferring a decision on their pay award until later in the year.

Key findings

Headline findings on basic pay awards for the three months to 28 February 2009, based on 156 basic pay awards, reveals the following:

Spread of deals is wide. The interquartile range - between which half of all pay awards lie - is lower than that recorded a month ago. The lower quartile (the cut-off point for the bottom quarter of awards in our sample) stands at nil in the three months to the end of February 2009. The upper quartile (marking the top quarter of pay deals) is 3.8%.

Almost six in 10 deals are lower than a year ago. Analysis of a matched sample of awards reveals that almost six in 10 (59%) are lower than the award the previous year. One-third (31%) of awards are higher, with the remaining 10% set at the same level as a year ago.

Other key headlines include:

Three in 10 pay awards is a pay freeze. Almost three in 10 (28%) of the pay deals recorded in the rolling quarter to the end of February are for a pay freeze.

Employers delay decision on January pay awards. Not included in our analysis are an additional 26 bargaining groups for which the decision to award a pay increase from their review date of 1 January 2009 has been postponed until later in the year.

IRS Pay and Benefits editor, Sheila Attwood said:

The most common pay award so far this year is nil. However, the majority of organisations are still making pay awards, albeit at lower levels than a year ago. We expect the median pay award to hover around its current position of 2.6% over the next few months.