Pay Intelligence

Do we need to communicate more about reward and benefits?

2012-05-15T13:31:07Z

The latest annual Reward Management Survey from the CIPD suggests that employers' reward spend is not fully understood or appreciated by staff due to a lack of education and communication. The survey notes that more than one-third of companies plan to increase their spend on employee benefits this year, but Charles Cotton, rewards adviser at the CIPD, says that "if employees don't understand or value what they are getting, these employers are not likely to reap the competitive advantage they are seeking".

It found that just 17.8% of employers use total reward statements and only one in five offer financial education to help employees understand the value of their reward package.

The survey also hints at the pressure organisations' reward budgets are currently under:

More than one-third of companies plan to increase their spend on employee benefits this year, and for more than half of these this is due to increases in benefits costs.
Over the past year pay review outcomes have been driven by ability to pay, inflation and market rates.
A large proportion of respondent organisations are aiming to pay at or above the median market rate in order to attract, retain and engage employees.
There has been a slight increase in the use of more flexible performance-related bonuses against a slight decline in performance-related pay rises.
Around half the organisations surveyed will need to make changes to their pension arrangements as a result of auto-enrolment.

The CIPD research complements the recent XpertHR article on communicating benefits [£], which noted that "when employees have a good understanding of what their organisation is offering them, this can make a real difference to their engagement and commitment levels."

There is definitely a consensus that in a time of restrained reward budgets, the first way to get the most out of your reward spend is to ensure employees know the value of what they are getting.

The CIPD's report is based on a survey of 455 organisations. The full report can be found on their website.

How much is everyone else paying their staff?

2012-05-10T23:08:40Z

Comparing pay and benefits packages is almost a universal practice among employers, but why do they do it, what are they looking for and where do they get the information from?

The XpertHR survey of market pay comparisons [£] reports on how 145 organisations use market pay. Among the key findings are:

Market comparisons are most likely to be used as a spot check on current salaries, and during the annual pay review process.
Companies compare their reward packages with those of their competitors in order to get ahead on recruitment and retention.
A benchmarking exercise typically draws data from five different information sources.
Organisations often report problems matching their job roles to those in the survey data, but have a number of different ways to get around this.

Read all the findings, including details of the problems encountered and how organisations overcome these, in our survey report.

XpertHR has also recently reported on what is happening in the public-sector around market-facing pay. The Government believes that higher public-sector pay may be hampering private-sector companies' ability to recruit and retain staff in some regions. Evidence has been presented from trade union groups which suggest this is not the case.

See also XpertHR's Job Pricing service, which allows you to spot check salary rates and complete full-scale pay and benefit reviews at company level.

XpertHR economic commentary May 2012: On the critical list

2012-04-30T23:00:01Z

With the UK economy back in recession, XpertHR's May 2012 economic commentary looks at prospects for recovery and how long the age of austerity might last.

The UK economy is "on the critical list," according to the Ernst & Young ITEM Club.

Recent weeks have brought unwelcome economic news, suggesting that the UK economy could be in need of urgent attention.

The UK economy is in a state of double-dip recession, and concerns are mounting that recent falls in inflation could be coming to an abrupt halt.

Against this backdrop, XpertHR's economic commentary for May 2012 looks at prospects for growth, youth unemployment, public sector cuts, and asks if the age of austerity might be only just beginning.
]]> UK economy in double-dip recession
The UK economy has plunged back into a state of technical recession.

The UK economy contracted for a second consecutive quarter, shrinking by 0.2% in the first quarter of 2012. This is according to the preliminary estimate on growth in gross domestic product (GDP) published by the Office for National Statistics (ONS) last week.

The technical definition of a recession is two successive quarters of negative GDP growth.

This is the UK's first double-dip recession since the 1970s, according to Reuters.

The Guardian's Larry Elliott notes that news that we are back in recession makes things difficult for Chancellor George Osborne:

Slow growth makes it harder for the government to hit its deficit-reduction targets and may well result in the UK having its credit-rating downgraded. That would be a bitter blow for Osborne, since his entire economic and political strategy has relied on the UK remaining in the dwindling club of nations with a prized AAA rating.

'Three successive quarters' of falling GDP possible, says Bank of England
How likely is it that economic growth will get back on track?

The economy may also contract in the current quarter, the Bank of England Monetary Policy Committee (MPC) warns. The MPC says that it "could not rule out the publication of official data showing GDP falling for three successive quarters."

Here is a round-up of latest expert forecasts on UK economic growth in 2012 and beyond:

The Ernst & Young ITEM Club thinks "this year's growth is likely to be lower than last year's depressing" data. It expects UK GDP to grow by 0.4% in 2012 - half the level predicted by the Office for Budget Responsibility (OBR). It forecasts GDP growth of 1.5% in 2013 and 2.6% in 2014.
The IMF has followed the OBR's lead in revising its forecasts for UK GDP growth in 2012 upwards to 0.8%.
The OECD's Christoper André argues that Osborne should relax his austerity measures for a year, in order to boost growth. André recommends instead cutting VAT and increasing borrowing.
Standard & Poor's (S&P) cautions that austerity measures will "likely drag on economic growth," with GDP expected to grow by around 1.6% each year between now and the 2015 general election. S&P has reaffirmed the UK's AAA credit rating as "stable." This is in contrast to Fitch and Moody's, both of which recently changed their assessment of the UK economic outlook to "negative."

A premature end to rapidly falling inflation?
Recent months have seen a welcome easing of inflation from the high levels seen throughout 2012.

But this trend could be coming to a premature end, latest official inflation data suggest:

Consumer prices index (CPI) inflation ran at 3.5% in March 2012. This represents an unexpected rise of 0.1 percentage point when compared with the previous month's figure (3.4%). "The largest upward pressures to this change came from food, clothing and recreation & culture," says ONS.
Retail prices index (RPI) inflation, however, showed a slight fall to run at 3.6% over the 12 months to March 2012, down 0.1 percentage point from February's figure (3.7%).

The rise in CPI means "the sharp slowdown in UK inflation has come to a premature end," according to Scotiabank's Alan Clarke.

So where will inflation go from here?

The minutes of the MPC's April 2012 meeting note a "a risk that inflation would fall less rapidly in the near term than the Committee had anticipated in its February Inflation Report central projection." The MPC had previously predicted that inflation would fall "below the 2% target by the beginning of next year."
Alan Clarke of Scotiabank argues that "the barrage of petrol- and budget-related price hikes coming through and water bill increases" are likely to prevent "inflation slowing very much from here."
In contrast, Vicky Redwood of Capital Economics believes that "inflation should start to fall again before long, not least as last year's rises in energy prices continue to fall out of the annual comparison."

For more on the future path of inflation, see XpertHR's latest round-up of inflation forecasts (XpertHR subscription required).

Will the gap between pay awards and inflation continue to narrow?
Pay awards have been failing to keep pace with the cost of living for an extended period.

The median whole-economy pay award (as measured by the XpertHR pay databank) has been set below the level of RPI inflation for each consecutive rolling quarter since the three months ending 31 December 2009 (XpertHR subscription required).

Sunday Times Economics Editor David Smith says that closing the gap between pay awards and inflation is important for economic recovery:

The fall in both measures of inflation [RPI and CPI] is essential if the growth in real incomes is to be restored, thus supporting spending.

The gap between pay awards and inflation has been narrowing over recent months. However, as XpertHR pay specialist Jo Doonar notes (XpertHR subscription required) the current uncertainty over the future path of inflation also makes future changes to the gap between pay awards and inflation uncertain:

Although the gap between inflation and pay awards is narrow (it is currently one percentage point compared with 2.8 percentage points for 2011 as a whole), which should be good news in terms of real pay, the fall in retail prices index (RPI) inflation has not been as dramatic as some economists expected and it now stands at 3.6%.

The median whole economy pay award was 2.6% over the three months to 31 March 2012, according to latest figures from the XpertHR pay databank (XpertHR subscription required).

So how likely is it that the gap between pay awards and inflation will continue to narrow?

XpertHR Pay and Benefits Editor Sheila Attwood says that "the gap between pay awards and inflation is only going to close considerably if inflation falls as there is no sign of a significant rise in the level of pay awards."

Youth unemployment eases, but youth unemployment crisis remains
The UK's youth unemployment crisis is ongoing, with well over one million people aged between 16 and 24 unemployed. However, youth unemployment saw a slight fall in the latest official data:

The youth unemployment rate was 22.2% on the ILO measure over the three months to February 2012, down 0.1 percentage points on the previous quarter.
The youth unemployment level was 1.03 million over the three months to February 2012, down 9,000.

Alternative measure of youth unemployment marks first anniversary
The latest unemployment data release also marked the first anniversary of ONS publishing its alternative measure of youth unemployment, which excludes people in full-time education.

ONS started reporting the alternative measure of youth unemployment in its April 2011 data release following pressure from Secretary of State for Work and Pensions Iain Duncan Smith, who argued that the internationally-accepted ILO measure of youth unemployment was "misleading."

The CIPD suggests that Iain Duncan Smith's demand for a rethink on the reporting of youth unemployment could have been influenced by the CIPD's own thinking on youth unemployment.

The alternative measure of youth unemployment is controversial.

Some commentators argue that the Government favours it solely because it paints a picture of youth unemployment that is more flattering to them than the ILO measure.

Economist David Blanchflower says that use of the alternative measure of youth unemployment is tantamount to "fiddling the figures." This is because the alternative measure of youth unemployment excludes young people in full-time education, yet they continue to be included in the overall employment figures for young people.

While the alternative measure of youth unemployment remains some way short of the "million milestone" (a milestone which the ILO measure passed in November 2011), it has nonetheless showed a sharp increase over the past year:

According to the alternative measure of youth unemployment, there were 719,000 unemployed 16 to 24 year olds between December 2011 and February 2012 (down 11,000 on the quarter). However, this is up sharply when compared with the first reported data on this measure, which stood at 660,000 over the three months to February 2011.
The youth unemployment rate on the alternative measure stands at 20.5% (down from 20.7% in the previous quarter). This compares with 18.6% a year ago.

Headline unemployment rate shows a welcome fall..
Unemployment has shown a slight easing on a number of other key measures:

The headline unemployment rate (on the ILO definition) fell back slightly to 8.3% between December 2011 and February 2012. This is down by 0.1 percentage point from the rate for the preceding three-month period (8.4%). ONS says: "This is the first quarterly fall in unemployment since the three months to May 2011."
The number of unemployed people fell to 2.65 million, down 35,000.

...but are we looking at a 'part-time recovery'?
Part-time working is on the rise. Work Foundation researcher Andrew Sissons believes we could be seeing evidence of a "part-time recovery".

This is not necessarily a good thing:

The number of part-time workers in the UK is rising rapidly, while the number of full-time workers is falling.
The number of people reporting that they are working part-time because they cannot find a full-time job hit a record high of 1.4 million, and actually showed a greater increase (rising by 89,000 when compared with the previous quarter) than did the overall number of part-time workers (which rose by 80,000, to 7.4 million).

Unemployment 'will not peak until September 2012 at the earliest'
It seems probable that unemployment will resume its upward path later this year:

The Institute for Public Policy Research (IPPR) sees a risk "that high unemployment becomes a permanent feature of the UK economy, as it did in the 1980s." It predicts that unemployment will not peak until September 2012 at the earliest, with a further 100,000 people becoming unemployed over the remainder of the year, primarily as a result of job cuts in the public sector.
The Work Foundation says: "Going forward, we are unlikely to see any significant improvements in unemployment until the labour market becomes much stronger. This depends on solid economic growth, with increases in full-time work and hours worked. The outlook for both remains uncertain."

Benchmarking the impact of public sector cuts

Public sector cost-cutting measures are ongoing in 2012, and are likely to result in further job losses, XpertHR Benchmarking research suggests:

Nearly nine in 10 public sector employers expect to make cuts to organisational wage bills in 2012.
Redundancies (whether voluntary or compulsory) are the most common restructuring measure planned for 2012 by public sector employers surveyed by XpertHR.

The numbers of voluntary and compulsory redundancies that public sector employers expect to make in 2012 are higher than the equivalent number recorded by XpertHR a year ago, in 2011.

'Faster, higher, stronger': PPMA head calls for 'harder-edged' HR in the public sector
"Faster, higher, stronger." This is new Public Sector People Managers Association (PPMA) President Martin Rayson's assessment of what he expects to be the themes of his presidency. In an interview with HR Magazine, Rayson said: "It is not about doing HR differently, but with a harder edge."

Rayson pinpoints the key challenges for HR in the public sector:

The industrial relationship challenges, pay freezes - and belief that senior executives are paid too much - don't create a positive brand and this should be a concern to HR professionals.

XpertHR research suggests that staff morale in the public sector is deteriorating as public spending cuts continue:

Three-quarters of public sector employers say staff morale worsened during 2011 as the impact of public spending cuts intensified.
A further two-fifths say that industrial relations at their organisation worsened in 2011. Only one in 10 said that industrial relations had improved.

Rayson notes that while the spending cuts enacted so far were "front-loaded," Chancellor George Osborne's Autumn Statement included "hints of further reductions, so our challenge is to get organisations to focus on the long term."

Rayson's prescription for "harder-edged HR" in the public sector could be required for many years to come.

The age of austerity is in its infancy
Rather than winding down in time for the 2015 general election (as had originally been planned, or shortly after the election, as the revised timetable sketched out in Osborne's 2011 Autumn Statement suggested), the age of austerity could have only just begun

Indeed, as we noted last year, permanent austerity could be in prospect, at least in our lifetimes.

This is because increased longevity and consequent increased pension burdens and other costs arising from an ageing population could force additional austerity measures over the coming decades.

Leading UK HR blogger Rick argues that these factors are likely to result in "permanent cost-cutting." In his view, the UK's ageing population "means that the Government's response will have to be simultaneous tax increases and spending cuts."

Are we underestimating longevity and its financial impact?
A number of recent reports have explored the rising life expectancy levels and their potential financial impact:

Rising longevity means that "around one-third of babies born in 2012 in the United Kingdom are expected to survive to celebrate their 100th birthday," according to latest ONS estimates.
However, the IMF argues that such forecasts "have consistently underestimated lifespans." This gives rise to "longevity risk" ("the risk that actual lifespans of individuals or of whole populations will exceed estimates"). This in turn means that Governments risk having underestimated the future costs associated with ageing populations. The IMF believes that "longevity shocks" are likely as the true costs associated with increased longevity become clear.
The OECD finds that "most countries will need a sustained period of fiscal tightening, acting on both the revenue and spending side [...] in order to bring their debt back to 50% of GDP by around mid-century." But this need for "sustained" cuts could be exacerbated significantly by mounting "spending pressures, principally from health and long-term care," arising from ageing populations.

Issues around the rising costs of future elderly care provision are also increasingly being addressed by the mainstream media. Last Friday's Daily Telegraph lead with a front-page story entitled Elderly care funding will force closure of libraries, councils warn. It highlights "an unprecedented show of cross-party unity [in which] local government chiefs have issued a direct plea to David Cameron, Nick Clegg and Ed Miliband, urging them to act now to avoid 'dangerous' delays in agreeing reform to elderly services."

No country for young men
As well as the pressures posed by high and rising youth unemployment, today's young people are also experiencing an "unprecedented" deterioration in living standards.

This is according to analysis of official data on 730,000 UK households from 1961 to 2009/2010 from The Data Archive, conducted by the Financial Times. The FT finds that "Britain is no country for young men."

The FT analysis reveals that "real disposable household incomes of people in their 20s have stagnated over the past 10 years just as older households are capturing a much greater share of the nation's wealth. This means that "the living standards of Britons in their 20s have been overtaken by those of their 60-something grandparents for the first time."

The UK has consequently seen "an extraordinary reversal in economic fortunes," in which "the elderly prosper while the young flounder."

An inheritance of perpetual austerity?
Taken together, the ongoing youth unemployment crisis, falling living standards and the long-term implications of the UK's ageing population could mean that today's young people will have an inheritance of perpetual austerity to look forward to.

See also:

XpertHR Private Sector Pay Forecast Benchmarker See how your organisation measures up against the latest pay forecast benchmarking data from XpertHR, and against latest expert inflation forecasts compiled by XpertHR (XpertHR subscription required).
XpertHR Pay Intelligence: Economics Catch up on all the recent economics-related posts on this blog.
XpertHR Benchmarking: Pay and Benefits Access a wealth of interactive benchmarking data on pay and benefits, via XpertHR Benchmarking.
XpertHR Pay and Benefits Visit XpertHR's Pay and Benefits zone.

Benefits and allowances survey - take part now!

2012-04-30T13:40:35Z

With little to offer in the way of pay rises, many organisations are now looking at their benefits packages to ensure they provide value for money for them and the right mix for their employees. Our 2012 benefits and allowances survey has already received responses from more than 250 organisations, who have told us about their benefits provision from health and travel benefits to pensions, long-service awards and allowances.

Participating in our 2012 benefits and allowances survey will enable you to benchmark your organisation's benefits arrangements against other participants for free.

All survey participants will receive a free copy of the 2012 research report, and will be entered into a prize draw to win one of four £25 Marks & Spencer vouchers.

Take part now.

Introducing salary survey spreadsheet tools

2012-04-30T07:30:50Z

XpertHR Salary Surveys contain a vast amount of data to enable reward professionals to benchmark pay. The trick is being able to manipulate the data and see how individuals and groups of employees match up against the market.

That's why we produce a whole range of different tools to enable you to do just this. In addition to an annual PDF report (twice a year in the case of our market-leading Computer Staff Salary Survey), we have an online Job Pricing tool and a suite of specialised spreadsheet tools.

Here's a short video (less than five minutes) to demonstrate these spreadsheet tools.

XpertHR Salary Surveys spreadsheet tools

More PowerPoint presentations from Mark XpertHR

Find out more about XpertHR Salary Surveys.

Key Skills Hot Regions

2012-04-23T15:45:35Z

XpertHR's Computer Staff Salary Survey collects data on the key skills used by IT staff. It is interesting to note that the families of key skills are not necessarily evenly distributed by region. Based on our Key Skills report for January 2012, the spread of skill families was as set out in the table below.

Group	Inner London	Outer London	South East	South West & Wales	EA & Midlands	North West	North & NE	Scotland & NI	Total
Operating System	9.1%	35.8%	4.2%	6.7%	15.4%	11.7%	8.9%	8.3%	100.0%
Language	26.3%	22.1%	5.4%	10.1%	11.1%	11.5%	7.3%	6.1%	100.0%
System Admin.	27.4%	28.4%	3.6%	3.3%	18.0%	10.4%	6.8%	2.2%	100.0%
Networking	15.6%	29.9%	5.6%	6.2%	12.9%	13.2%	9.4%	7.2%	100.0%
Security	27.7%	23.2%	10.2%	6.4%	14.0%	6.7%	6.4%	5.4%	100.0%
Data persistence	17.7%	24.4%	3.9%	11.0%	14.5%	13.2%	9.3%	6.0%	100.0%
Application	16.1%	26.6%	4.5%	7.1%	22.6%	6.4%	14.0%	2.6%	100.0%
Methodology	25.8%	27.6%	3.8%	7.9%	10.5%	11.5%	6.1%	6.8%	100.0%

Table1: IT grouped key skills by region

As the table shows, the hottest of all the hot spots is for staff with skills in operating systems, 35.8% of whom are based in outer London. Outer London has a greater concentration of IT companies, especially in the Thames valley area. Nationwide outside the London area, East Anglia and Midlands tend to concentrate more key skills leaving the South East, Scotland and North Ireland with lowest levels of concentration.

Group	Inner London	Outer London	South East	South West & Wales	EA & Midlands	North West	North & NE	Scotland & NI
Operating System	14.5%	34.3%	25.8%	23.0%	27.5%	29.1%	26.0%	37.1%
Language	19.8%	10.1%	15.5%	16.5%	9.4%	13.6%	10.1%	13.1%
System Admin.	4.5%	2.8%	2.3%	1.2%	3.4%	2.7%	2.1%	1.0%
Networking	8.0%	9.3%	11.0%	6.9%	7.4%	10.6%	8.9%	10.4%
Security	1.8%	0.9%	2.6%	0.9%	1.0%	0.7%	0.8%	1.0%
Data persistence	18.7%	15.6%	15.7%	25.0%	17.2%	21.9%	18.1%	18.0%
Application	16.9%	16.9%	18.3%	16.1%	26.8%	10.6%	27.2%	7.8%
Methodology	15.7%	10.1%	8.8%	10.3%	7.2%	10.9%	6.8%	11.6%
Total	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%

Tablel2: Region by IT grouped key skills

Looked at by skill family rather than by region, key skills in operating systems tend to be the most common in every region in the UK.

The Computer Staff Salary Survey is published twice a year in June and December. Published in an unbroken series since 1968, it is a clear market leader with data on more IT professionals and their managers than any similar UK survey and runs from entry level to board level. (link)

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Managerial pay rises, but so do resignations

2012-04-20T09:29:44Z

XpertHR and the Chartered Management Institute have released figures today from the XpertHR National Management Salary Survey revealing the rising rate of resignations among professionals and managers in the UK.

My colleague Laura Chamberlain has reported the findings for Personnel Today.

The figures are not altogether surprising as resignations typically increase after a period of recruitment freezes - and if anything this may well be a sign that the economy is looking a little healthier.

Even so, the figures are a concern for employers who need to do all they can to retain good staff after a couple of years of widespread pay freezes and low earnings growth. As the release also shows, pay rises for managers and professionals have moved upwards over the past year, but not by very much.

The full press release is here on the Chartered Management Institute website.

The Chartered Management Institute and its predecessors have been involved with XpertHR's National Management Salary Survey since its launch back in 1973. At the time, they were the British Institute of Management, we were Remuneration Economics.

And how times change. Back then the median chief executive salary stood at £10,600, while even those in banking, insurance and business services only managed to push the figure up to £15,348. These days that is somewhere around the full-time rate for someone on the minimum wage.

Find out more about the National Management Salary Survey for 2012.

Relatively speaking, company directors may not be much better off than their staff

2012-04-20T08:25:35Z

There is a general perception that the pay gap between top executives and their staff has increased dramatically in recent times. With huge bonuses for some banking chiefs in the news, it's easy to see where the idea comes from, but is it true more generally?

The XpertHR National Management Salary Survey has been running since 1973, so we could go back decades to show how pay has changed, but the past five years - from just before the start of the economic downturn to the present day - is more interesting.

Taking data from the survey, the figures below show how average basic salaries changed at all levels between 2007 and 2012.

Pay gaps in Basic Salary (Average). (a)

Levels	2007	2012	Diff.
Directors (11-12)	£130,875	£138,744	6.0%
Senior Function Head (13)	£96,877	£96,803	-0.1%
Function Head (14)	£73,937	£79,904	8.1%
Department Manager (15)	£58,263	£62,718	7.6%
Section Manager (16)	£46,533	£50,076	7.6%
Professional Level 4 (20)	£38,926	£42,821	10.0%
Professional Level 3 (21)	£32,272	£34,829	7.9%
Professional Level 2 (22)	£25,750	£28,508	10.7%
Professional Level 1 (23)	£20,927	£21,393	2.2%
Entry Level (24)	£16,346	£16,870	3.2%

The largest increases have gone to professional staff - most notably those at XpertHR's Professional Level 2 (10.7%) and Professional Level 4 (10%). Directors' pay went up 6%, while Senior Function Heads saw a marginal 0.1% fall in pay.

Taking the average basic salary of staff at the entry level grade as a starting point, the figures show that a director earned 8 times as much as their lowest paid staff in 2007 and 8.22 times as much in 2012.

On this measure, the gap between entry level staff and those at all levels of the organisation with the exception of Senior Function Heads and Professional Level 1 employees widened over the five-year period.

But if you look instead at total earnings, the picture is subtly different. On this measure, Directors saw their pay rise by just 1% between 2007 and 2012 - a lower increase than that enjoyed by any other level of seniority.

Pay gaps in Total Earnings (Average).(b)

Levels	2007	2012	Diff.
Directors (11-12)	£172,233	£174,016	1.0%
Senior Function Head (13)	£114,247	£116,537	2.0%
Function Head (14)	£86,954	£96,442	10.9%
Department Manager (15)	£68,398	£72,025	5.3%
Section Manager (16)	£53,911	£56,688	5.2%
Professional Level 4 (20)	£43,121	£47,433	10.0%
Professional Level 3 (21)	£34,482	£37,709	9.4%
Professional Level 2 (22)	£27,383	£30,860	12.7%
Professional Level 1 (23)	£21,935	£22,368	2.0%
Entry Level (24)	£17,365	£17,844	2.8%

Based on total earnings, Directors saw their multiple of entry level pay fall from 9.92 to 9.75.

More surprising, based on earnings, Directors have lost ground against every single level within the organisation. This analysis suggested that reductions on bonus and commissions have affected Directors the most.

Sources:

The National Management Salary Survey 2012 (38843 individuals)

The National Management Salary Survey 2007 (42205 individuals)

The National Management Salary Survey provides an overview of pay and benefits for managers and professionals across the UK. Published since 1973, it is endorsed by the Chartered Management Institute and includes data up to and including chief executive level. (link)

(a) Basic salary: Basic annual salary before deductions for tax, national insurance, pension contributions etc but including London or other location allowances, performance or skills supplements but excluding any bonuses, commission payments and mortgage subsidies.

(b) Total earnings: Basic annual salary before deductions for tax, national insurance, pension contributions etc but including London or other location allowances, performance or skills supplements plus any bonuses, commission payments and mortgage subsidies as well as any shift or standby allowance paid.

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Where have all the new IT jobs come from?

2012-04-19T15:43:23Z

Over the past decade the XpertHR Computer Staff Salary Survey has grown by well over a third. In May 2000 it had data on 47,058 employees in 42 job functions. By December 2011 it covered 65,823 employees in 57 functions.

But where have all the new jobs come from?

Since 2000, the only job function to have been deleted is "key input". The 16 new functions added to the survey are listed here (along with the number of employees covered by each function last time round):

Job Function	No.
Applications Support (59)	1905
Customer Services (83)	1746
Business Strategy Consultancy (27)	856
IT Consultancy (28)	549
IT Sales (90)	527
Application Consultancy (29)	310
Client-Server Support (68)	297
Procurement (95)	284
Operations Research (39)	192
Knowledge Management (81)	135
Disaster Recovery (75)	125
Bid Management (97)	109
Configuration Management (73)	85
Risk Management (79)	67
Performance Diagnostics (53)	66
Human Factors - ergonomics (40)	18

Within the 41 job functions that have been represented continuously since 2000, 24 now cover more employees than they did then. They are as follows:

Job Function	2000	2011	Diff.	%
Technical Consultancy (26)	64	1303	1239	1936%
Programme/Project Office (92)	67	887	820	1224%
PC Systems/Multi-Skilled Client Server (64)	931	5692	4761	511%
Systems Testing (35)	262	1538	1276	487%
Account Management (80)	524	2790	2266	432%
Architecture (54)	562	2715	2153	383%
Project Management (33)	1520	4853	3333	219%
General Management (30)	480	1097	617	129%
Webmaster/Designer (61)	150	315	165	110%
Technical Support (60)	2350	4907	2557	109%
Change Control (74)	208	391	183	88%
Security Administration (78)	248	466	218	88%
Security & Computer Audit (38)	136	253	117	86%
Developer (46)	2372	4379	2007	85%
Help Desk (84)	2151	3835	1684	78%
Performance &Capacity Planning (77)	105	150	45	43%
IT Marketing (91)	86	110	24	28%
Quality Assurance (37)	271	345	74	27%
Computer Operations (88)	2150	2671	521	24%
Contracts Management (96)	124	152	28	23%
Human Resources (98)	91	105	14	15%
Administration (94)	887	1004	117	13%
Database (52)	756	810	54	7%
Business Systems (34)	4723	5037	314	7%

The sample size of 16 functions increased by more than 40% over the period. Most remarkably of all, technical consultancy increased by 1,936%, the largest rise in percentage terms. In absolute terms, the biggest increase was in PC Systems/Multi-skilled Client Server.

Of the 17 functions where numbers decreased, the biggest faller was Analyst Programming, which had been the biggest group of all in 2000. The others were:

Job Function	2000	2011	Diff.	%
Network Operations (89)	275	269	-6	-2%
Operations Support (82)	1930	1727	-203	-11%
Network Services (69)	1046	916	-130	-12%
Development Management (32)	955	768	-187	-20%
Systems Programming (50)	1081	833	-248	-23%
Technical Author (49)	52	40	-12	-23%
Resource Management (93)	132	91	-41	-31%
Implementation (76)	328	217	-111	-34%
Production Control (85)	409	232	-177	-43%
Print Shop (86)	151	72	-79	-52%
Programming (44)	2627	1219	-1408	-54%
Systems Design (36)	2730	1245	-1485	-54%
Training (99)	303	135	-168	-55%
PC Support Centre (67)	3187	1287	-1900	-60%
Analyst Programming (42)	9515	3418	-6097	-64%
Communications Planning & Design (48)	776	254	-522	-67%
Emerging Technologies (55)	125	24	-101	-81%

Sorting and ranking the data shows that the biggest groups of employees in 2000 and in 2011 were as follows:

	2000			2011
Rank	Job Function	No.	%	Job Function	No	%
1	Analyst Programming (42)	9515	20%	PC Systems/Multi-Skilled C/S (64)	5692	9%
2	Business Systems (34)	4723	10%	Business Systems (34)	5037	8%
3	PC Support Centre (67)	3187	7%	Technical Support (60)	4907	7%
4	Systems Design (36)	2730	6%	Project Management (33)	4853	7%
5	Programming (44)	2627	6%	Developer (46)	4379	7%
6	Developer (46)	2372	5%	Help Desk (84)	3835	6%
7	Technical Support (60)	2350	5%	Analyst Programming (42)	3418	5%
8	Help Desk (84)	2151	5%	Account Management (80)	2790	4%
9	Computer Operations (88)	2150	5%	Architecture (54)	2715	4%
10	Operations Support (82)	1930	4%	Computer Operations (88)	2671	4%

So while Analyst programming was the star job in 2000, it has now been relegated to seventh place. Top of the table now is PC Systems (ranking 15th in 2000). Business Systems was and still remains in second place.

The shrinking number of analyst programmers is surprising. This could be explained by a lack of new blood coming from universities. According to UCAS, university applications for computer science and IT courses fell from 40,473 in 2011 o 37,367 in 2012. (link)

Over the longer term the number of students taking A level computing has dropped from 27,000 in 2000 to 4,000 in 2010. (link)

Outsourcing could also provide an explanation, with many large employers moving jobs to India and elsewhere to take advantage of cheaper labour costs.

All salary surveys change over time, but IT surveys are more dynamic than most as new technologies and business practices are introduced, and new jobs are created along the way. The most recent addition to the XpertHR survey is Knowledge Management, which gathered data on 135 individuals in our latest report.

Lastly, roles that blend IT functions and non-IT job functions are increasingly common. This makes more difficult to define an IT job.

How IT professionals have felt the middle class squeeze on salaries

2012-04-12T12:41:51Z

Over the past decade or so the economy has gone from boom to bust. But how well off are IT professionals now compared with, say, at the turn of the millennium?

Looking back at XpertHR Computer Staff Salary Survey findings in May 2000, the job with the largest sample composition was analyst programmer, with 3,866 employees in 34 organisations. They earned an average basic salary of £27,543.

	May-00	Dec-11	Increa.	Yearly	Source
Analyst Programmer	£27,453	£33,508	22%	2.0%	XpertHR Computer Staff Salary Survey

CPI	92.1	121.7	32%	2.9%	Bank of England

Housing	£77,698	£164,785	112%	10.2%	NationWide (National All Houses)
Unleaded petrol (litre)	63p	138p	119%	10.8%	ONS
Bread (loaf/800g)	51p	80p	57%	5.2%	ONS
Milk (pint)	34p	49p	44%	4.0%	ONS

Table: price movements

Fast forward to December 2011, and the average salary for the same job was £33,508 (based on 1,152 employees in 66 organisations).

Leaving aside variable pay and benefits, or at least assuming that they have stayed roughly constant as a percentage of basic pay, that means an overall increase of £6,055 or 22% over 11 years - just 2% a year, which is really quite unimpressive.

Graph: price movements

So how does that look against changes in the UK economy? Take, for example, the government's preferred measure of inflation, the CPI, which shows a 2.9% yearly increase on average since 2000.

Or the Nationwide housing market index, which shows property prices to have risen by 10.2% a year. Or the yearly increase in the prices of everyday articles such as milk (4%), bread (5.2%) or unleaded petrol (10.8%).

Clearly working in IT over the past decade, at least as an analyst programmer, has not been very financially rewarding. Just feel the "middle class squeeze".

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XpertHR economic commentary April 2012: Not out of the woods yet

2012-04-01T06:30:01Z

XpertHR's April 2012 economic commentary looks at the risk of double-dip recession, trends in unemployment, and predictions for private sector pay awards.

"It is far too soon to conclude that we are out of the woods."

This is New York Federal Reserve head William Dudley's assessment of the global economic outlook. Dudley's words are particularly relevant to the UK.

April 2012 could prove a pivotal month for the UK economic recovery.

Despite some positive signals, particularly from falling inflation and gradually rising pay awards, the UK economic situation remains precarious.

We will learn this month if we are in a double-dip recession, or if UK economic growth merely continues to flatline (arguably the best-case scenario in current circumstances).

XpertHR's economic commentary for April 2012 looks at prospects for growth, trends in unemployment and inflation and predictions for private sector pay awards. We also report on the key announcements from Chancellor George Osborne's Budget 2012.
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Budget 2012: What it means for HR
Chancellor George Osborne delivered the Budget 2012 on Wednesday 21 March 2012.

The Budget 2012 saw Osborne operating within tight constraints, delivering what the Telegraph describes as a "fiscally neutral" set of announcements.

KPMG Chief Economist Andrew Smith argues that the Chancellor's commitment to "sticking to 'Plan A' [means] there is little scope to radically alter the (at best) sluggish outlook for the economy."

The headline announcements in Osborne's Budget 2012 were focused on the extremes of the income tax spectrum. XpertHR reports:

On tax, the Chancellor announced that the 50% higher rate will reduce to 45% from April 2013. The personal income tax allowance will increase to £8,105 from April 2012, and to £9,205 from April 2013 (an increase of £1,100).

Measures relating to employment law set out in Budget 2012 included the following:

A relaxation of Sunday trading laws from 22 July 2012 to 9 September 2012 to coincide with the Olympics and Paralympics.
Confirmation that "protected conversations" are on the way, subject to consultation during 2012.
A commitment to "scrap or improve" 84% of health and safety legislation.

XpertHR resources on Osborne's Budget 2012:

Official resources on Budget 2012:

In search of lost time: UK economy back at 2004 levels
The global economic crisis is now in its fifth year, but its impact has effectively set the UK economy back to where it was in 2004, according to The Economist.

The Economist has created The Proust Index, which it describes as "a measure of lost time for hard-hit countries." The Proust Index is named after French novelist Marcel Proust, author of À la Recherche du Temps Perdu - an epic meditation on lost time.

The Proust Index assesses economies around the world on "seven indicators of economic health." It finds that UK has lost eight years, while the US economy has been set back a decade, and Greece has lost 12 years.

The Economist says that high and rising unemployment in the UK economy is a particular cause for concern:

[Unemployment] measures are the most worrying of all. Growth will reset the economic clock, providing new jobs and the resources to pay down debts. The IMF predicts that in three years Italy will be the only G7 country with real GDP [gross domestic product] lower than in 2007. Within this group, America, which is already growing again, is in a better position than Britain, which is not. But periods of unemployment scar workers even after economies have crawled back to health. For some, the time lost to the crisis will never be recovered.

Unemployment hits highest level since 1995
High and rising unemployment is a matter of serious concern in the UK, particularly in light of the Proust Index assessment of the risks it poses to recovery.

The headline unemployment rate hit a 17-year high last month:

The headline unemployment rate (on the ILO definition) rose to 8.4% of the economically active population between November 2011 and January 2012 (up from 8.3%). ONS says this measure " was last higher in the three months to November 1995."
The number of unemployed people rose by 28,000 to stand at 2.67 million.
The number of unemployed 16 to 24 year olds was 1.04 million (an increase of 16,000).
The youth unemployment rate hit 22.5% over the three months to January 2012 (up from 22.1%).

Is private sector job creation overtaking public sector job losses?
But the latest data on levels of employment appeared to bring some good news for Osborne.

Private sector job creation could finally be starting to overtake the rate of public sector job losses - one of the key planks of 'Osbornomics.' ONS says:

The number of people employed in the public sector fell by 37,000 between September and December 2011 to reach 5.94 million, the lowest figure since June 2003. The number of people employed in the private sector increased by 45,000 on the quarter to reach 23.17 million.

However, these figures may not ultimately prove as positive as they first appear:

ONS does not appear to report whether these new jobs in the private sector are full-time or part-time. Overall, numbers of part-time workers are on the rise. There were 7.88 million people in part-time employment over the three months to January 2012, a rise of 59,000.
Economist David Blanchflower argues that a closer analysis of the data (from the time when the Coalition Government's policies began to take hold) suggests that "the private sector is not generating the jobs to offset cuts in the public sector." Blanchflower says: "The public sector job cull meant that net job creation was negative, of the order of -44,000. I have no idea how anyone in their right minds could interpret this as good news."

Bleak outlook for unemployment in 2012 and 2013
Economic commentators are united in expecting unemployment to continue to rise. Latest unemployment forecasts include the following:

The British Chambers of Commerce (BCC) expects the unemployment level to hit 2.9 million (equivalent to 9% of the workforce) in Q1 2013. The BCC believes young workers will be hardest hit. It expects to see a 41% jobless rate for 16 and 17 year olds by Q1 2013, while the 23% of 18 to 24 year olds will be out of work by Q4 2012.
The OBR expects unemployment to peak this year. XpertHR summarises its latest unemployment forecasts: "Unemployment will peak in 2012 - both on the ILO measure (8.7% unemployment in 2012) and the claimant count (1.67 million unemployed). The OBR says that one million more jobs will be created over the next five years. Consumer prices index inflation is forecast to average 2.8% in 2012 but to fall to 1.9% in 2013."

Brighter outlook for pay awards
Pay awards are showing a gradual increase.

The headline whole economy pay award was worth 2.6% over the three months to 29 February 2012, according to latest analysis of reward trends from XpertHR (XpertHR subscription required). This is in line with the revised figures for the two preceding rolling quarters.

Looking ahead, XpertHR's private sector pay forecast survey finds that private sector employers expect pay awards to be worth 2% at the median over the 12 months to 28 February 2013 (XpertHR subscription required). This figure rises to 2.5% for those in the manufacturing and production sector.

Subscribers to XpertHR Benchmarking can access and drill down into the complete results data from the Pay Forecast 2012 survey.
All XpertHR subscribers can access XpertHR's Private Sector Pay Forecast Benchmarker, which enables you to see how pay trends at your organisation measure up.

National minimum wage 2012/2013: Adult rate increases by 1.8%; younger workers' rates frozen
Retail sector pay awards over the coming year could well be affected by the national minimum wage rates for 2012/2013. The Coalition Government announced in March 2012 that:

The national minimum wage adult rate will increase by 1.8% to £6.19 per hour with effect from Monday 1 October 2012.
National minimum wage rates for younger workers are to be frozen at their current levels for 2012/2013.

Interest rates: Three years at rock bottom
Last month marked the third anniversary of record-low interest rates of 0.5% for the UK.

Looking ahead, there would appear to be no chance of an interest rate rise during 2012:

The BCC and IFS are united in predicting that a rate rise is unlikely before late 2013.
Bank of England Governor Mervyn King suggests that "an increase in bank rate is not fully priced in until mid-2014."

RPI inflation hits lowest level since December 2009
Inflation continues on the gradual downward direction it has plotted over recent months, according to latest inflation data from ONS:

Retail prices index (RPI) inflation fell back to 3.7% in February 2012, down from 3.9% in January. ONS notes that "the annual rate was last lower in December 2009 though the 3.7% was equalled in January 2010 and February 2010."
Consumer prices index (CPI) inflation stood at 3.4% in February 2012, down 0.2 percentage points from 3.6% in January.

Falling inflation is vital for economic recovery
Reuters says that how far and how fast inflation falls could be of key importance to economic recovery.

It says that "falling inflation is seen as crucial for the fragile economic recovery to gather pace." This is because falling inflation is "keeping hopes alive that easing inflation will allow hard-pressed consumers to increase spending this year and boost the economy."

Inflation forecasts: Oil price volatility could make inflation "sticky"
It is not a foregone conclusion that inflation will continue to fall. The inflation outlook is complicated by rising oil prices (with UK petrol prices achieving record highs during March 2012).

Latest inflation forecasts include the following:

The British Chambers of Commerce (BCC) expects CPI to average 2.7% during 2012, while RPI will run at 3.2%. BCC Chief economist David Kern says: "Falling inflation will ease the squeeze on living standards."
IHS Global Insight economist Howard Archer warns of the dangers that "sticky" inflation could pose to recovery: "Sticky inflation would maintain the squeeze on consumers' purchasing power and make it harder for the Bank of England to do more quantitative easing should the economy continue to struggle."
The OBR's central forecast is for "inflation to continue falling as the upward pressures from energy and commodity prices fade and spare capacity weighs on prices." It predicts that CPI will average 2.8% in 2012, falling to 1.9% in 2013. However, the OBR is also mindful of the risks to inflation posed by volatile oil prices. Its report additionally includes projections for a possible "'temporary oil price spike scenario,' in which a temporary shock to oil prices leads to prolonged cyclical weakness in the economy."
The ONS calculates that measures set out in Osborne's Budget 2012 will also make a small upward contribution to inflation. They will increase the 12-month rate of CPI inflation by 0.17 percentage points, and will add 0.13 percentage points to the 12-month rate of RPI inflation.

US economy in focus: 'A new recession is inevitable'
Prospects for the US economy are critical to the fortunes of the global economy.

At first glance, the US economy appears to be faring significantly better than the UK.

"America is already growing again," the Economist notes. Indeed, the US economy is posting strong growth, with GDP expanding by 3% in Q4 2011 alone, according to latest official data.

But - as is also the case in the in UK - the US recovery is precarious. Some commentators are concerned that these levels of growth cannot be sustained, with the most pessimistic warning that a new recession could be in the offing:

"A new recession is inevitable" for the US economy, argues Lakshman Achuthan of the Economic Cycle Research Institute (ECRI), which has a strong record of predicting recessions. CNN says: "Achuthan predicts the recession will happen even without a new shock to the economy, such as a spike in oil and gas prices or a Greek sovereign debt default sparking a financial meltdown. If those things occur, he says they will simply make an inevitable recession more painful." This "would be a new recession, not a double-dip."
Rising oil prices and weak global growth represent potential "headwinds" for the US recovery, says New York Federal Reserve head William Dudley.
A weak property market means that the US recovery could stall in the coming months, according to Robert Reich, writing in the Guardian. Reich identifies this as "the central paradox at the heart of the American economy today."
It is unlikely that recent falls in the US unemployment rate can be sustained without a recovery in demand, according to the Federal Reserve Chairman Ben Bernanke. He says: "What we may be seeing now is the flip-side of the fear-driven layoffs that occurred during the worst part of the recession, as firms become sufficiently confident to move their workforces into closer alignment with expected demand for their products."

UK economic growth: 'No recovery to speak of'
Returning to the UK economy, the immediate concern is that we could already be in a double-dip recession.

At present, the UK economy remains stuck in reverse:

The UK economy contracted by 0.3% in the fourth quarter of 2011, according to latest revised estimates of growth in gross domestic product (GDP) published by the Office for National Statistics (ONS) last week.
This represents a slightly sharper contraction than that reported in the preliminary and first revised estimates, both of which showed GDP contracting by 0.2% in Q4 2011.

Looking ahead, the Guardian's Larry Elliott argues that a return to pre-recession levels of growth is not even a possibility at the moment:

Despite a monetary and fiscal boost unprecedented in peacetime, there is no recovery to speak of. [...] As things stand, the choice appears to be between permanent slow growth or short booms followed by protracted hangovers.

UK economic growth forecasts: Is a double-dip recession inevitable?
This month sees the publication of the eagerly-awaited preliminary estimate of economic growth in the first quarter of 2012 from ONS, on Wednesday 25 April 2012.

The UK will officially be back in recession if GDP is shown to have contracted for a second consecutive quarter.

But how likely is a double-dip recession for the UK economy?

Some commentators believe that the UK is already back in recession:

The OECD estimates that the UK economy contracted by 0.4% in the first quarter of 2012. However, it expects UK GDP growth to return to positive territory quickly, to run at 0.5% in the second quarter.
The past 15 months have seen UK economy undergo "the Osborne collapse, according to economist David Blanchflower: "It appears austerity has failed in the UK lab experiment.""

However, the majority of economic forecasters appear reassured that a double-dip recession can be avoided, but with only unspectacular levels of growth. Many see a "zigzag" recovery - similar to that envisioned by Mervyn King - as the more likely scenario for growth.

Here is a round-up of recently-published GDP predictions:

"After a rebound in Q1, growth is likely to weaken in Q2 due to the additional Bank Holiday for the Queen's Diamond Jubilee. The London Olympics in Q3 may also distort the growth figures." This is according to the BCC. It has revised its 2012 GDP forecast down from 0.8% to 0.6%. 2013 unchanged at 1.8%.
NIESR believes that recession can be avoided, but that the economy will remain flat in the near term: "Avoiding a return to recession is obviously welcome, but at present the UK economy can best be described as 'flat'. We expect the UK's economic recovery to take hold in 2013. [...]We do not expect output to pass its peak in early 2008 until 2014."
The OBR is the only economic commentator to raise its estimates for UK GDP growth in 2012. It says: "We still expect the economy to avoid a technical recession with positive growth in the first quarter of 2012, although another fall cannot be ruled out given the volatility of quarterly output estimates." The OBR expects the UK economy to grow by 0.8% in 2012, having previously predicted 0.7% growth.

Are we looking at a 'debt-fuelled recovery' for the UK?
But even if double-dip recession can be avoided, would the UK be likely to enjoy 'the right kind of recovery'?

The UK economy is likely to experience a "debt-fuelled recovery," according to the Guardian's Phillip Inman. Inman says:

What kind of consumption-driven recovery are economists cheering when wages are growing more slowly than the cost of a weekly shop? The answer is a debt-fuelled recovery.

This is Inman's recipe for a debt-fuelled recovery:

[B]etter off families are paying down their mortgages more slowly than expected and dipping into savings to maintain their standard of living. Poorer families are turning to pay-day loan companies. Their combined efforts keep retailers' tills ringing and appear to have prevented a double-dip recession.

Worryingly, Inman believes that the behaviours underlying the debt-fuelled recovery suggest that "the notion of a re-balancing between debt and savings appears to have gone out the window."

And wasn't it debt that helped get us into this mess in the first place?

See also:

XpertHR Private Sector Pay Forecast Benchmarker See how your organisation measures up against the latest pay forecast benchmarking data from XpertHR, and against latest expert inflation forecasts compiled by XpertHR (XpertHR subscription required).
XpertHR Pay Intelligence: Economics Catch up on all the recent economics-related posts on this blog.
XpertHR Benchmarking: Pay and Benefits Access a wealth of interactive benchmarking data on pay and benefits, via XpertHR Benchmarking.
XpertHR Pay and Benefits Visit XpertHR's Pay and Benefits zone.

Private sector pay forecasts 2012: How does your organisation compare?

2012-03-29T06:00:00Z

How will your organisation's 2012 pay award compare with those at other organisations in the private sector? And how will it stack up against projected movements in inflation?

A new service from XpertHR makes it easy for you to find out.

XpertHR private sector pay forecast benchmarker
XpertHR's private sector pay forecast benchmarker spreadsheet enables you to see how your organisation measures up against the latest pay forecast benchmarking data from XpertHR, and against latest expert inflation forecasts compiled by XpertHR.

All XpertHR subscribers can access this benchmarker spreadsheet.

Benchmarking Private Sector Pay Forecasts for 2012

XpertHR private sector pay forecast benchmarker Download the XpertHR private sector pay forecast benchmarker spreadsheet, and answer the questions to create a printable report on how your organisation compares.
Pay Forecast 2012 The full results data from XpertHR's Srping 2012 benchmarking survey of private sector forecasts is also available to XpertHR Benchmarking subscribers.
Private sector pay forecasts for 2012: the XpertHR survey XpertHR's detailed analysis of the survey findings.

More about XpertHR Benchmarking

XpertHR Quick Benchmarker All XpertHR subscribers can get a taste of what XpertHR Benchmarking has to offer through the XpertHR quick benchmarker, which allows you to compare how your organisation is performing against five key metrics - including latest data on ratios of employees to HR staff in 2012.
XpertHR Benchmarkers XpertHR's benchmarker spreadsheets provide you with a quick and easy way to measure and monitor your organisation's performance on key HR measures against the latest XpertHR Benchmarking data.
XpertHR Benchmarking Visit the XpertHR Benchmarking homepage.

Home Secretary launches urgent consultation on police pay reforms

2012-03-27T17:38:39Z

Home Secretary Theresa May has issued a written ministerial statement on the second and final part of the review of police pay and conditions in England and Wales led by Tom Winsor. The review, which was published on 15 March 2012, includes proposals to reform officers' pay structures and the ways in which they join and leave the service.

May wants the Police Negotiating Board and Police Advisory Board for England and Wales "to consider as a matter of urgency proposals on pay, a fast-track scheme to the rank of inspector and other matters that are within their respective remits."
]]> second part of the Winsor review set out 121 recommendations on long-term reform of the police service, among them replacing the Police Negotiating Board with a new pay review body for police officers and the Review Body on Senior Salaries being responsible for setting the pay of chief constables.

Other recommendations highlighted in the ministerial statement include:

introducing a normal pension age of 60 for police officers - May said this will be reflected in the proposal for long-term reform of police pensions to be considered by the Police Negotiating Board; and
new entry routes for police officers, with direct entry to the ranks of inspector and superintendent, and entry at the rank of chief constable for those with relevant experience overseas.

May said: "The recommendations made in the report are matters of serious national importance for the service, which could play a vital role in reform. They represent significant changes to structures for pay, conditions, careers and leadership. I will therefore be taking forward the steps I have described as a matter of urgency."

The Police Federation of England and Wales, which represents police constables, sergeants and inspectors, said the reforms set out in the second part of the Winsor review would "dismantle" the police service, and only days ago called for the Home Secretary to reject its proposals. The Federation's chairman, Paul McKeever, said: "Theresa May has forced the hand of police officers across England and Wales to call for a ballot on whether they want industrial rights."

The first part of the Winsor review was published in March 2011. It made recommendations on short-term changes to pay and conditions including a two-year suspension of progression increments in addition to a two-year basic pay freeze. Recommendations relating to police officers were referred to the Police Arbitration Tribunal after the Police Negotiating Board failed to reach agreement, and in January this year May confirmed that she accepted the tribunal's findings.

The Police Staff Council - which negotiates national agreements on pay and conditions for most police staff in England and Wales - was asked to consider the recommendations of the first part of the review relating to police staff but has failed to reach agreement, with the trade union side saying it is unable to accept the cuts to terms and conditions as nothing is being offered in return.

The second part of the Winsor review recommends that pay and grading for police staff should continue to be the responsibility of individual police forces, with the Police Staff Council retaining its current role. The trade union side has stated that a national pay and grading scheme for all police staff would have to be an option if it is to continue negotiations on pay and conditions.

Today's ministerial statement makes no mention of the recommendations relating to police staff in the second part of the Winsor review, which include forces looking at how their police staff salaries relate to the local labour market; extending contribution-related pay progression to all police staff; and abolishing performance-related bonus schemes.

Subdued pay rise of 2% expected in the year ahead

2012-03-26T08:19:52Z

Private sector employers are predicting pay awards of just 2% in the year to 28 February 2013 [£] according to data from pay specialists XpertHR.

The slow economic recovery is continuing to influence organisations, with pay freezes and redundancies forecast by some, but a pay rise is on the cards for most employees. Our survey found:

• More than three-quarters of respondents (76.1%) say they are planning to award a pay rise on the normal review date. Around a tenth of organisations are forecasting a pay freeze.
• The median pay rise forecast for the private sector overall is 2% - but this rises to 2.5% when not-for-profit organisations are excluded.
• Half of all organisations surveyed expect to award rises worth between 2% and 3%.
• Employers in the manufacturing and production sector are forecasting a median 2.5% pay rise over the next year, compared with a 2% forecast by private sector services firms.
• Only 9.9% of organisations expect to give an award worth more than 2012's RPI forecast of 3.2%.
• Approximately half (48.3%) of the organisations surveyed expect some change to other employee terms and conditions. Of those giving details, 34.4% expect to make at least some redundancies and a quarter will review their benefits.
• Almost one-quarter (23.2%) of respondents say pension costs generally will be a downward influence on pay awards and 17.5% say pension costs due to the introduction of auto-enrolment are likely to restrain pay.

Employers do not feel under pressure to compensate for several years of low/zero pay rises - only 16.6% of organisations think the 2012 pay deal needs to makes up for previous low awards. Additionally, more than three-quarters (76.4%) of organisations feel that employees have accepted the need for pay restraint - this may be because organisations have 'stuck together', keeping in-line with competitors in terms of rates of pay.

The figure from our pay forecast survey is lower than our current median pay award of 2.6% for the three months to 29 February 2012, but organisations may be wary of committing to higher pay rises and some feel burdened by pension changes. Additionally, the not-for-profit sector, which tends to take its lead from the public sector in terms of pay awards, accounts for more than one-fifth of respondents to this survey.

XpertHR Pay and Benefits editor Sheila Attwood said:

"Although we might expect employees to be tiring of low pay rises or pay freezes, our survey respondents indicate that to date they have understood about the economic challenges that organisations face. However, a median 2% increase during 2012 will result in another of year of below-inflation pay rises."

Budget 2012 - key announcements for HR

2012-03-21T12:14:27Z

The Chancellor's Budget on 21 March 2012 needs to deliver growth to the UK economy. He starts by saying that it "rewards work" and backs business.

The key announcements of interest to HR are:

Growth

Office for Budget Responsibility (OBR) forecast for UK GDP growth in 2012 is 0.8% (and the UK will avoid technical recession in 2012). This is up from 0.7% forecast in the autumn statement in November 2011. Following this GDP growth is forecast at 2% in 2013 (down from 2.1% forecast in the autumn statement); 2.7% in 2014; and 3% in 2015 and 2016.

Unemployment

Unemployment (on the ILO measure) is expected to peak at 8.7% in 2012, falling to 6.3% by the end of the forecast period (2015/16). Claimant count unemployment is expected to peak at 1.67 million in 2012.

Inflation

CPI inflation is expected to fall from an average 2.8% in 2012 to 1.9% in 2013. The Chancellor confirmed the 2% target for CPI inflation.

Pension age

There will be an automatic review of the state pension age - details to be published this summer.

Sunday trading

The Government will relax the Sunday trading laws for eight Sundays only starting 22 July 2012.

Regional pay in the public sector

The Chancellor says that we "will see whether we can make public sector pay more responsive to local rates. London weighting already exists". He has asked the independent pay review bodies to look at it, and will publish the Treasury evidence to these today.

Tax

Will simplify the tax regimes for small firms - will consult on plans for firms with a turnover of up to £77,000 a year.

Pressing forward with operation to integrate processes for income tax and NI - a consultation on this will be published next month.

From 2014, around 20 million taxpayers (those contacted by the HMRC) will receive a Personal Tax Statement detailing what taxes and National Insurance they have paid and how these are being spent - "a tax system that is simple and transparent" says the Chancellor.

Headline rate of corporation tax - currently at 26% and due to fall to 25% from April 2012 - will be a further cut of 1% - to 24% - to take effect immediately. By 2014 will have a 22% rate of corporation tax. "Biggest sustained cut in business tax rates for a generation," says the Chancellor.

Personal tax

Chancellor: My goal is that the lowest paid are lifted out of tax altogether, while the tax paid by the richest increases.

The higher tax rate - 50p per £1 for income over £150,000 - "can only be justified if it raises significant sums of money". Publishing figures from the HMRC today - £16bn of income deliberately shifted into the previous tax year; self assessment receipts are below forecast; and it raised just a third of the £3billion "we were told it would raise". From April 2013 the top rate of tax will therefore be reduced by 5p to 45p.

As previously announced, the personal income tax allowance will increase by £635 to £8,105 from April 2012. From April 2013 this will increase by £1,100 to £9,205.

Employment law

The Government announced that it will relax Sunday trading laws from 22 July 2012 to 9 September 2012 inclusive for the Olympics and Paralympics. It also set out progress regarding its various proposed reforms to employment law, confirming that "protected conversations" are on the way, subject to consultation that will take place in 2012. It is also considering responses to its calls for evidence regarding the current TUPE provisions and the rules regarding collective redundancies, with a view to consulting on any proposed changes in autumn 2012.

The Government plans to respond before the summer recess on the consultation regarding fees for tribunal claims, and confirmed that Mr Justice Underhill's report on the employment tribunal rules of procedure will be delivered in spring 2012.

The Government will also "scrap or improve" 84% of health and safety legislation, which includes the removal in 2012 of "strict liability" provisions for employers where they have done everything that is reasonable practicable and foreseeable to protect their employees. It will also, by October 2013, amend the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 (SI 1995/3163) and its associated guidance to provide clarity for businesses on how to comply with it.

The full Budget report is available on the HM Treasury website.