Pay rises down

Employers are continuing to resist pressure from higher inflation when setting pay rises, finds research.

The median basic pay award for the whole economy has fallen from 2.4 per cent to 2 per cent in the three months to the end of April 2011, according to data on 2 million employees from pay specialists XpertHR.

This reflects the impact of low or non-existent pay rises in the public sector, where pay freezes are the norm.

Settlements in the private sector are higher, at a median 2.4 per cent in the three months to the end of April 2011 (unchanged since the three months to January 2011), but remain well below pre-recession levels of 3 per cent to 3.5 per cent.

Public sector workers have effectively seen their pay cut in real terms by 4.4 per cent over the past year, when public sector pay rises at a median 0.8 per cent over the 12 months to April 2011 are compared with Retail Prices Index inflation of 5.2 per cent in April.

Having been decreasing as a proportion of settlements over the past few months, pay freezes are back up again to one in five (19.3 per cent) from the 9.2 per cent reported last month. Again, this reflects the impact of low public sector awards, with almost three-quarters (73 per cent) covering either public or not-for-profit sector employee groups.

XpertHR deputy editor Sarah Welfare says, ‘While private sector pay awards have recovered a little over the past year, this latest data confirms our view that we are seeing only a slow and gradual recovery in private sector pay rises in 2011, most of which continue to fall behind increases to the cost of living.

‘Meanwhile, public sector workers are experiencing significant cuts in real take-home pay. The findings confirm the extent to which real, take-home pay is being eroded in both the public and private sectors.’

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