One in four 2009 pay awards is worth 3.8% or more

Last week we reported on new Bank of England research which finds that pay awards in excess of 3% are “rare” in 2009. It might therefore seem surprising that so far in 2009, one in four pay awards is worth 3.8% or more (subscription required), according to IRS research.

But this is indeed the case. Our latest analysis of whole economy pay trends finds that while the headline pay award recorded a slight fall to 2.8% over the three months to 31 March 2009, the range of pay awards remains wide.

The interquartile range – between which half of all pay awards in our sample fall - is nil to 3.8% for the three months to 31 March 2009, This means that one in four pay awards in our sample is a pay freeze. But it also means that a further one in four is set at 3.8% or above.

Further, the latest interquartile range is in line with those recorded for the previous two rolling quarters so far this year. While the headline pay award has shown a gradual decline over the first quarter of 2009, the interquartile range has remained stable.

This stability in the upper quartile award is primarily due to two key factors: a number of pay awards linked to the high levels of retail prices index (RPI) inflation seen in 2008; and a further number of long-term deals allowing for higher-end increases.

The first quarter of the 2009 pay bargaining calendar is now concluded. But this traditionally acts only as a prelude to April – always the busiest month in the pay bargaining calendar (subscription required).

Our preliminary analysis suggests that April 2009 pay awards are settling close to the 1.5% mark, reflecting a severe deterioration in the pace of pay bargaining.

We might therefore also expect to see a marked decline in the upper quartile award, when our next analysis of whole economy pay trends, covering the thee months to 30 April 2009, is published to the XpertHR Pay and Benefits homepage on Friday 29 May 2009. This will provide a crucial indicator of the direction of pay awards for the remainder of 2009, as well as a valuable insight into the proportion of deals settling at or above 3%.

  • Has your organisation recently carried out an annual pay review? If so, and if it has now been settled, please get in touch so that we can add your organisation’s pay award to the IRS database.

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