Pay pressures mounting for UK PLC

Nov 15 2004 by Brian Amble Print This Article

Almost nine out of 10 private sector employers expect to award their staff pay increases over the next year that match or exceed the past 12 months' rises, according to a new survey.

IRS Employment Review's annual pay survey has found that in the 12 months from September 2004, employers predict that four out 10 pay settlements will be worth three per cent.

The proportion of awards expected to be lower than this has fallen to a quarter, down six per cent on 2003.

Meanwhile a fifth (18.6 per cent) of employee groups are looking at a pay award in excess of 4 per cent, a five per cent rise on last year.

The main factors driving the level of future pay awards continue to be company performance and ability to pay; the rate of inflation, and pay levels in other organisations in the same industry sector.

According to IRS, this means that the hard-pressed manufacturing sector is less likely than the service sector to make higher pay awards in the year ahead, Six out of 10 manufacturing pay awards are tipped to be the same with only a quarter likely to receive a higher increase.

In the service sector, more than a third of bargaining groups are expected to receive a higher award, just over half are forecast to be worth the same as the previous year. Only one in 10 will be looking at a lower settlement.

"The IRS headline measure of pay awards has remained remarkably stable over the past year at 3 per cent," said IRS Employment Review pay and benefits editor, Sheila Attwood.

"Although many employers are looking to replicate this over the coming year, there is a real possibility that pay rises will move above three per cent in the early months of 2005, in response to higher inflation at the end of this year.

"But this is unlikely to be sustained beyond that time, and pay settlements will fall back to our three per cent plateau," she predicted.