Tight rein on retail sector pay amid industry concerns

While some retail employees enjoyed a 7.8% pay increase as a result of the October 2004 increase in the national minimum wage, the majority of staff received a more modest 3% rise, according to specialist journal, IRS Employment Review, published by LexisNexis Butterworths.

IRS analysts found that the median basic pay increase (see notes to editors) in retail settlements stands at 3% for pay deals effective between 1 September 2004 and 31 May 2005. The research is based on data from 65 retail pay settlements, covering 663,973 employees.

Other key findings include:

Upward movement for interquartile range: the interquartile range shows that half of basic pay awards analysed fall between 2.9% and 3.5%, with one-third of basic settlements awarding a 3% increase. This is a significant upward movement on the range of 2.5% to 3% recorded in the previous years settlement analysis (deals concluded between 1 September 2003 and 31 May 2004).

More than half of basic awards higher than previous year: a matched sample shows that 62% of settlements in the 20042005 pay round awarded higher increases than a year ago. One-fifth of settlements awarded a lower increase than the previous award, while 18% were pitched at the same level.
Reviews moved to October: A few organisations have moved annual pay reviews to October in line with national minimum wage (NMW) upratings, while others hold further reviews in October alongside an earlier annual pay review.

Range of merit awards higher: paybill budget increases for all-merit reviews ranged from 2.5% to 3.5%, compared with 2% to 3% in last years analysis. The median paybill budget increase was 3%, higher than the 2.5% found a year ago.
Hours and holidays: The full-time working week median for retail employees is 38.5 hours, with basic holiday entitlement at a median of 22 days.
Location pay remains popular: Most of the retail organisations contacted by IRS vary their pay rates by region. Practices vary from higher rates for stores in London, to up to six location zones. Zones are chosen on a number of criteria, including cost-of-living, recruitment, and competitor rates.

IRS pay and benefits editor, Sheila Attwood said:

Within our sample of retail companies, only a handful continue to set their minimum rate in line with the national minimum wage. The 4.1% October 2005 uprating will therefore have less of an impact on retail wage bills than previous years rises.

However, negotiators are likely to continue to exercise caution when setting pay rises as under-performance in the sector is forecast to continue.