Bargaining year concludes at 3%

Pay settlements are holding steady as the current bargaining year draws to a close, according to pay specialists Industrial Relations Services (IRS).

Analysis of the latest pay settlements reveals that basic pay awards are at a median 3% in the three months to the end of August 2006. IRS researchers collected information on 73 settlements covering 819,409 employees, 60 of which allow for an identifiable basic pay increase. The retail prices index (RPI) inflation measure stood at 3.4% in August 2006.

IRS pay databank ñ other key findings include:

Range of payn deals narrows. While the upper quartile ñ the point at which just a quarter of pay deals are higher ñ remains unchanged at 3%, the lower quartile measure ñ below which a quarter of pay deals lie ñ has risen 0.1 percentage point to 2.6%. Therefore, half of all pay deals ñ the interquartile range ñ fall within just 0.4 percentage points of each other, between 2.6% and 3%. This is the narrowest interquartile range recorded by IRS pay researchers since September 2004.

Awards lowern than a year ago. This time last year, more than two-thirds of pay settlements in the quarter to August 2005 were worth more than in the previous year. Now, however, we have recorded a complete turnaround in this position, with 64% of pay awards in our latest analysis worth less than was received by the same group of employees a year ago. Just 9% of pay awards in the quarter to August 2006 paid a higher rise than the previous year.

Service dealsn recovered from early year low. Pay awards in the service sector are once again comfortably at 3% after some lower awards at the beginning of the year. However, in the three months to August 2006, manufacturing awards remain slightly lower, at a median 2.9% increase.

Public andn private sectors in tandem. Basic pay settlements in the 12 months to August 2006 remain at 3% at the median in both the public and private sectors.

Merit budgetsn dip. The median paybill increase from which performance-related pay awards are made has fallen 0.2 percentage points to 3.2% in the three months to August.

IRS Pay and Benefits editor, Sheila Attwood said:

ìBehind the 3% headline figure, the range of pay deals has shown a steady downward trend over recent months, and our latest analysis illustrates a marked pattern of lower awards compared with those awarded to the same groups of employees a year earlier.

ìLooking ahead, potential upward pressures include the impact of higher inflation levels feeding through to inflation-linked pay awards. However the key month for inflation-linked deals is January, so this will depend on whether inflation maintains its current levels during the autumn.î