Pay rises maintain 3.3% benchmark

UK pay awards for the first quarter of the year remain steady at 3.3%, but there are signs that April deals will not be so generous, according to the monthly analysis from pay analysts IRS (Industrial Relations Services), part of LexisNexis Butterworths.



The median (midpoint in the range) pay award remains unchanged from the IRS whole-economy figure for the three months to the end of February 2005.

Looking at the April 2005 pay deals within the IRS pay databank, there is already an indication that employers are reigning back on pay awards, and the expected fall in headline inflation can serve only to cement this trend.

Other key IRS pay databank findings:

Settlement distribution unchanged. The top 25% of pay awards (the upper quartile) and the bottom quarter of deals (the lower quartile) were both static in the three months to the end of March. The upper quartile is locked at 3.5% while the lower quartile is stable at 3.0%. This means that half of all recorded pay deals (the interquartile range) fall within just 0.5 percentage points.

Sectors remain parallel. Pay settlements in the 12 months to March 2005 remain at 3.0% in both the public and private sectors

Manufacturing deals steady. Pay awards in the manufacturing sector remain unchanged in March for the third consecutive month. The median basic pay deal has now stood at 3.2% since the rolling quarter to January 2005.

Service awards ahead of manufacturing. Pay deals in the service sector remain just ahead of those in the manufacturing sector, at 3.3% for the three months to March, unchanged from February.

Pay deals still higher than last year. While the majority of pay awards (56%) continue to be paid at a higher level than that received by the same bargaining group the year before, this marks a fall from the 66% receiving higher awards in the quarter to February. Just over one-fifth of settlements were each worth the same, or less, than the previous year.

IRS Pay and Benefits editor, Sheila Attwood said:

ìWhile the IRS settlement measure remains at a six-year high, the economic outlook suggests that downward wage pressures will intensify in the months ahead. Headline inflation remained steady at 3.2% in March, leaving it unchanged for three months. But, the increase in the RPI (retail prices index) is set to slow over the course of this year, with the IRS panel of economic forecasters predicting it will dip to 2.7% by the summer and 2.4% by the end of the year.

ìEarly analysis of April pay deals shows that they stand at 3%, largely as a result of the public sector pay review bodiesí below-inflation settlements. What is unclear at this stage is how these public sector deals will impact on our headline settlement measure when the IRS full analysis of the quarter to April is conducted.î