Pay awards have risen over the past quarter, with some help from the 1.2% increase to the national minimum wage that took effect on 1 October 2009, according to the latest analysis from IRS appearing on XpertHR today [subscription required].
Basic pay settlements were worth a median 1.2% in the three months to the end of October 2009, up from the pay freeze recorded for the past three rolling quarters.
We don't usually see such a significant boost from the minimum wage in our headline pay statistics, but as so many employers have been freezing pay this year, a 1.2% increase to minimum rates appears to have had a more significant effect on pay patterns than the higher minimum wage increases seen in previous years.
The proportion of pay freezes has gone down, standing at one third of pay awards over the same period. However the range of pay deals is similar to the pattern seen over the past few months, with the middle 50% of deals pitched between nil and 2.3%, so the low trend in pay awards continues.
It is difficult to say whether we will see wage rises for employees improving slightly over the coming months. The employers who took part in our pay prospects survey predicted a median pay rise of 2% for the coming year (see our slideshow), although one in four were uncertain whether a pay review would take place.
The key factors will be headline inflation - which is expected to rise fairly sharply in 2010 but not in time to influence pay awards settled in January - and the pace of economic recovery.
The latter is expected to be slow and protracted, with key sectors - manufacturing being the obvious example - expected to suffer well beyond this year.
But employers still finding business difficult next year will nevertheless be under pressure from employees who accepted pay freezes as a "one off" in 2009 and will not be happy to accept another one in 2010. The psychology of pay negotations in 2010 will be interesting.
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