UK pay rises fall back to 3%

UK pay awards have slipped back to 3% for the three months to April 2005, according to the monthly research from pay analysts IRS (Industrial Relations Services), part of LexisNexis Butterworths. This marks a 0.2 percentage point fall from the IRS revised headline figure of 3.2% for the previous rolling quarter to March 2005. These figures are based on the median range of basic pay awards.



This rolling quarter includes pay awards effective during April 2005 ñ the busiest period in the pay bargaining calendar. IRS researchers collected 172 deals with anniversary dates in the three months to April 2005, including 127 basic pay awards.

Other key IRS pay databank findings:

Settlement distribution unchanged. The top 25% of pay awards (the upper quartile) and the lower quartile were static in the three months to the end of April ñ unchanged for four rolling quarters. The upper quartile remains at 3.5%, while the lower quartile is locked at 3%. This means that half of all recorded pay awards (the interquartile range) fall within 0.5% percentage points.

Public and private sector medians the same at 3% but private sector nudging upwards. Settlements in the 12 months to April 2005 continue to stick at 3% in the public and private sectors. Yet in the three months to April 2005, the median increase among private sector settlements was 3.1%. While half of all private sector settlements fell between 2.8% and 3.5%, the corresponding figure for the public sector was a much narrower and lower range of 2.9% to 3%, due to some major public sector deals in April paying just under the 3% mark.

Service and manufacturing sector awards aligned at 3%. For both the manufacturing and service sectors, the median pay award has fallen to 3% in the three months to April 2005, down from 3.1% for manufacturing in the previous rolling quarter (revised downward from 3.2%) and from 3.3% in the service sector. However, the lower and upper quartiles for the service sector stood at 3% and 3.5% respectively, compared with 2.6% and 3.2% in the manufacturing sector, indicating greater buoyancy in service sector pay deals.

More pay deals higher than last year. The proportion of pay deals that are higher than the previous settlement for the same bargaining group has risen from 56% in the previous rolling quarter to 63% in the three months to April 2005. However 37% of pay deals are worth the same, or less, than the previous year.

Public sector pay deals lag behind private sector. Looking at the 33 April 2005 public sector basic pay deals, the median basic award is 2.95%. A total of 28 basic pay deals out of 33 are worth 3% or under, with just four deals worth more than 3%. Looking at private sector deals for April 2005 alone, the median pay awards stands higher, at 3.2%.

IRS Pay and Benefits editor, Sheila Attwood said:

îAt the busiest time of year in the pay bargaining calendar, the latest IRS pay analysis reveals a dip from the higher settlement levels at the start of 2005. The sample to April 2005 covers well over three million employees, with the inclusion of some major public sector deals below the 3% mark that are exerting a downward influence on the all-economy median of basic settlements.î

ìMeanwhile pay settlements in the private sector are more buoyant, standing at 3.2% for April alone. As the headline rate of inflation ñ the key influence on settlement levels ñremains firmly stuck at 3.2%, we expect pay deals in the private sector to remain above 3% over the next few months.î