Pay awards hold at 3% but upward pressures detected

The IRS headline measure of pay awards ñ the median in the range of basic awards ñ continues to stand at 3%, according to pay specialists Industrial Relations Services (IRS).

Behind our headline figure, however, our provisional analysis finds indications of an upward move in pay settlement levels, with the median pay settlement for the private sector standing at 3.4%.

Octoberís 5.9% increase to the national minimum wage appears to have played a part in boosting the number of pay deals at the upper end of the range, with some employers increasing their lowest pay rates by this amount.

Our latest analysis is based on 47 basic pay awards effective in the three months to 31 October 2006, covering more than 400,000 employees.

IRS pay databank ñ other key findings include:

Private sector median up. The median basic pay award in the private sector has increased to 3.4% in the three months to October 2006, and has been revised upwards from 3% to 3.1% in the previous rolling quarter. When both private and public sectors are compared over the twelve months to October 2006, however, the median pay settlement in both sectors is 3%.

Upper quartile rises sharply. The upper quartile pay award ñ the cut-off point for the top 25% of pay awards ñ has increased sharply to 3.7% in the three months to October, from 3% the previous rolling quarter. With the lower quartile ñ below which the bottom quarter of pay awards stand ñ unchanged at 2.5%, this means that 50% of pay awards are worth between 2.5% and 3.7%.

Manufacturing and service deals in line. The median pay award in both the manufacturing and services sector stood at 3% in the three months to the end of October 2006, unchanged from the three months to September. In both sectors, however, the upper quartile pay award has shifted upwards, standing at 3.7% in the manufacturing sector and 3.5% in the services sector. The lower quartile pay award stands at 2.5% in the manufacturing sector and 2.8% in the services sector.

Three quarters of awards higher or the same as previous year. A matched sample analysis reveals that for the 24 settlements for which we have comparative data, 42% were higher than the previous yearís increase for the same group. While the small sample size means that these findings should be treated with caution, 33% awarded the same increase and 25% gave a lower increase.

IRS Pay and Benefits editor, Sarah Welfare said:

ìAs this is a quiet time in the pay bargaining calendar, it is too early to say whether our latest findings represent an upward movement in pay settlements that will be sustained as we enter the all-important January pay bargaining round.

However the downward influences we have seen over the most of 2006 appear to be weakening, with a sharp rise in private sector settlements against a backdrop of Octoberís increase to the national minimum wage and headline inflation running at 3.7%.î