As part of our annual review of pay trends, XpertHR has just published a series of features analysing pay settlement patterns in each of 12 private and voluntary sectors (subscription required) over the year to August 2010.
The headline finding (Personnel Today's write-up) was that most manufacturing sectors saw pay rises recover a little over this period, while pay deals in the voluntary sector fell sharply.
We looked at 1,327 settlements taking effect in the 12 months to 31 August 2010.
Overall, basic private sector pay settlements were worth 1.3% over this period, compared with 0.5% in the public sector (we will be taking a closer look at public sector pay awards in the new year).
For context, the chart below shows what has happened to whole-economy pay awards over the past two years.
Analysis by sector shows that:
- The highest median basic pay award by sector was recorded in the general manufacturing, and food, drink and tobacco sectors, which both recorded median pay rises of 2%.
- Sectors slightly above the going rate for the private sector included retail, chemicals and pharmaceuticals and construction (although almost four in ten construction deals were pay freezes), all showing a median basic rise of 1.5%.
- At the other end of the spectrum, the median pay award in housing associations was nil, meaning that at least half of basic pay awards froze pay rates.
- Also low, at a median 1% award, were charities, paper and printing, and transport and communication.
Finance sector deals are often performance-based rather than giving a single basic rise, so cannot be compared directly with our findings for other sectors. But the median paybill increase for merit deals in the finance sector was 2.5%, down on 3.5% a year ago.
Pay predictions for the next 12 months
Predictions for pay rises over the year ahead also reveal disparities by sector. Based on the findings of XpertHR's recent pay prospects survey of 300 firms, we found that pay awards are expected to be in the region of 2% during 2011. The results reveal that:
- Two sectors, chemicals, and food, drink and tobacco, are forecasting pay rises in the region of 3% next year.
- Other sectors coming in above the median are utilities, engineering and retail.
- At the other end of the scale, not-for-profit employers think pay rises will be worth just 1% in 2011.
- Other sectors with predictions below the median are construction and hotels and catering.
Overall, only 9.2% pay awards are expected to freeze pay in the year to August 2011, compared to 30.6% that were pay freezes in the 12 months to August 2010.
Pay deals have already picked up a bit since earlier this year, registering a median of 2% in the three months to the end of September 2010. However this is still well below the pre-recession norm of 3% to 3.5% (see the chart above).
In view of the shaky prospects for the UK labour market, it is likely that pay deals will continue to lag behind inflation in the short term (in September RPI inflation stood at 4.6% compared with a 2% median pay rise), meaning that many employees are likely to continue to see pay cuts in real terms, despite pay rises recovering a little.
To find out more, browse the index page for our annual review of pay trends here (you will need to subscribe to click through to the articles).
That's quite an interesting analysis, especially regarding the private sector particulars.