UK pay deals remain at 3%

UK pay settlements continue to hover at 3%, according to the monthly analysis from pay analysts IRS (Industrial Relations Services), part of LexisNexis.

The median basic pay settlement continues to stand at 3% in the three months to September 2004, unchanged from the quarter to August. This marks another milestone as the IRS Pay Databank reveals that this figure is now unchanged since April 2003 and it also marks the longest period of settlement stability since pay settlements also stalled at 3% for 18 months between April 1996 and September 1997.

Other key findings include:

Pay awards tightly bunched. The cut-off point for the lowest 25% of pay awards - the lower quartile - has increased this month, to 2.8% from 2.6% in the quarter to August. It is now at its highest level since December 2003. At the same time, the upper quartile - marking the point at which a quarter of pay awards are higher, has dipped by 0.1 percentage points and now stands at 3%, the same as the median pay settlement. Therefore, half of all pay awards fall within just 0.2 percentage points - 2.8% and 3%.

Private sector stays ahead of public. The reversal in fortunes continues, with private sector pay deals 0.1 percentage point higher than those in public services. In the 12 months to the end of September 2004, private sector employees saw a median 3% basic pay increase, compared with 2.9% for public sector workers.

Manufacturing and service deals level. Pay deals in both the manufacturing and service sector continue to hold steady at 3% in the quarter to September 2004. In the service sector, pay awards have now stood at a median of 3% since March 2003, while manufacturing deals have dipped from 3% to 2.9% in several quarters over the past 18 months.

Pay deals higher than a year ago. Just over four in 10 pay settlements (43%) made in the past year were higher than a year ago. A fifth (19.9%) of bargaining groups received the same increase, while the remaining 37.1% received a lower rise.

IRS Pay and Benefits editor, Sheila Attwood said:
ìAs employers and pay negotiators head into the new pay round, running for a year from 1 September 2004, IRS finds that the settlement stability seen over the past 18 successive rolling quarters has again been maintained. While headline inflation has moved between 2.5% and 3.1% over the past 18 months, the median basic pay settlement has refused to budge from 3%.î