The report revealed that the manufacturing has achieved the highest median pay awards of three per cent, compared to the services sector where only half of that rise has been attained.
Mark Thompson, Associate Director of Hay Group, commented: “These figures concur with predictions made by our clients at the start of 2011. I’m a little surprised about the service sector with pay inflation suggested by this survey at only 1.5 per cent. I would have expected this to be higher but perhaps it is suppressed by the inclusion of retailers where the pressure on cost control is particularly heavy at the moment.”
The public sector is also experiencing a squeeze on wages, with all but the lowest paid employees in the middle of a two-year pay freeze imposed by the Government. The median salary increase for this group of workers is just 0.5 per cent – this is compared to 2.2 per cent in the private sector over the same period.
Despite pay awards being subdued, the results are marginally better than this time a year ago. Over the period of three months to the end of June 2010 the median wage increase was 1.5 per cent, 0.5 per cent lower than this year’s figure.
For Thompson one of the main issues is how long the British public will be able to weather such low pay increases compared to the level of inflation. Although there is an upward trend of wage increases, the median award still falls below the level of inflation, which currently stands at five per cent.
“To some degree this is due to the trade-off that many employee representatives have made between keeping people in jobs and winning a pay rise at least in line with price inflation: as a result the recent economic downturn has not resulted in unemployment on the same scale as past recessions,” reasoned Thompson.