Pay awards stick at 3.5%

For the second month, pay settlements are running at 3.5%, with no evidence that private sector pay awards are starting to slow, according to pay specialists Industrial Relations Services (IRS).

Provisional findings show that the IRS headline measure of pay awards ñ the median in the range of basic awards ñ remains at 3.5% in the three months to the end of February 2007, unchanged from the previous rolling quarter. This was an eight-year high for pay awards when we reported it last month.

Our latest analysis is based on pay awards effective during the three months to 28 February 2007. IRS researchers have collected details of 186 pay awards covering 182,332 employees. Of these, 151 include an identifiable increase in basic pay.

IRS pay databank ñ other key findings include:

- Spread of deals remains wide. The upper quartile basic pay award ñ above which 25% of pay settlements sit ñ was 3.9% in the three months to the end of February, unchanged from the previous rolling quarter. The lower quartile pay award ñ marking the bottom quarter of deals ñ was also unchanged, at 3% in the three months to February. These are exactly the same as our findings for the rolling quarter to January 2007.

- Private sector deals remain high. In the three months to the end of February 2007, the median basic pay award in the private sector was 3.5%, unchanged from the previous rolling quarter.

- Annual analysis reveals lower public sector deals. An analysis of basic pay awards in the 12 months to the end of February 2007 reveals that the median public sector award has fallen to 2.9%, down from 3% in the year to January 2007, with 50% of all pay awards worth between 2.5% and 3%. In the private sector, however, the median award in the 12 months to the end of February 2007 remains at 3%, with 50% of all pay deals worth between 2.5% and 3.5%.

- Manufacturing outpaces services sector. The median manufacturing settlement is 3.5% in the three months to the end of February 2007, slightly higher than the 3.4% median pay award in the services sector. Both are unchanged from the previous rolling quarter.

- Seven in ten pay awards higher than previous year. A matched sample analysis reveals that 71% of pay awards are higher than that received by the same bargaining group the previous year, 15% are the same and only 14% are lower.

- Merit deals slightly above basic awards. In the three months to the end of February 2007, the median paybill increase for individual performance-based pay awards was 3.6%, unchanged from the previous rolling quarter.

IRS Pay and Benefits editor, Sarah Welfare said:

ìPay awards in the private sector remain high, with the hike in headline inflation at the end of last year continuing to feed through to 2007 pay deals.

But if the recently announced low public sector pay review body awards set the tone for this yearís public sector deals, we would expect this to pull down the whole-economy level of pay awards by April.î