Pay rises hold steady at 2%

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Pay increases are firmly stuck at 2%, according to the latest analysis from pay specialists XpertHR. In the three months ending 31 October, the headline pay increase stood at 2% for the seventh consecutive rolling quarter, the research found.

However, private sector employers are predicting a median 2.5% pay award in the year ending 31 August 2012.

Sector splits remain

One of the key observations on pay settlements at the moment is the difference between pay awards in the public and private sectors. In the public sector in the year ending 31 October 2011 the headline pay award was a pay freeze – as the sector remains in the Government’s two-year pay freeze. By contrast, the private sector saw a median 2.3% pay increase over the same period.
Elsewhere, pay awards in manufacturing companies continue to run ahead of those in the services sector. In the three months ending 31 October 2011, the headline pay award among manufacturing companies was 2.5% compared with 1.5% in the services sector (which includes the public sector).

Pay freezes

We are yet to see the end of pay freezes, with almost three in 10 settlements in the latest analysis resulting in a pay freeze. However, less than 10% of private sector employers expect to have a pay freeze in 2012.
National minimum wage

The most significant event in the pay setting calendar at this time of year is the uprating of the national minimum wage (NMW) – the adult rate increased by 2.5% from 1 October 2011, half a percentage point above the headline pay award for the quarter. Among the private sector respondents to our pay prospects survey, a net balance of 16.1% expect changes in the NMW to put upwards pressure on the level of their next pay award.

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