UK pay deals slip back to 3%

The marginal upward trend in UK pay settlements has been short-lived, according to the monthly research from pay analysts IRS (Industrial Relations Services), part of LexisNexis Butterworths.

The median basic pay award stands at 3% in the three months to October 2005. This is unchanged from the revised figure for the quarter to September this year.

In the three months to 31 October 2005, IRS pay researchers collected information on 37 basic pay awards covering more than 400,000 employees.

IRS pay databank - other key findings include:

Interquartile range unchanged. The lower quartile pay award ñ marking the point at or below which a quarter of all deals lie ñ remains unchanged at 3%, the same as the median basic pay award. Meanwhile the upper quartile level ñ at or above which a further quarter of all deals stand ñ is also unchanged, at 3.5%. Therefore half of all deals ñ the interquartile range ñ remain within half a percentage point of each other.

Public sector awards tightly bunched. The median pay award in the public sector remains at 3% in the 12 months to October 2005. Half of all deals in the sector are worth between 3% and 3.2%, highlighting little variation in the level of public sector pay awards over the past year. Over the same period in the private sector, the median pay award also stood at 3%, but half of all awards fell between 2.8% and 3.5%, demonstrating a wider variation of pay deals.

Manufacturing and services deals in line. The median pay settlement in both the manufacturing and services sectors remains at 3% for the three months to the end of October 2005.

Higher awards than a year ago. A matched sample of pay awards reveals that just under half (46%) are worth more than a year ago. The remainder are split between those worth less (27%) and those paying the same rate in both years (27%).

Merit awards match basic rises. In a turnaround from the pattern seen in previous months, the median paybill increase for performance-based awards now stands in line with basic rises, at 3%.

IRS Pay and Benefits editor, Sheila Attwood said:

ìAs we move into the last month of the year, pay bargaining activity can be divided into two groups. Although a few employers settle pay awards in November and December each year, many more will be in the throes of negotiating pay rises due to take effect in January 2006. Just 3% of all pay deals are concluded in November and December each year, but a quarter are effective each January, making the final two months of the year a busy time for those preparing ahead.

ìOur figures provide a now-familiar picture of the benign state of UK pay bargaining. In the three months to the end of October 2005, the median ñ midpoint in the range ñ basic pay award across the economy stood at 3%. All eyes are now on the busy new year bargaining round to see how employers react to slowing headline inflation.î