Pay deals up to 3%, research shows

Pound coinsPay deals have increased to 3% in recent months, with some settlements worth more than 4%, according to new research.

A study of 65 agreements by pay analysts Incomes Data Services (IDS) showed that median awards increased from the 2.5% level seen during most of 2011.
Almost a third of the increases were 4% or more, while around one in 20 involved a wage freeze.

Pay rises for workers in the services sector lagged behind those in manufacturing firms, but the gap is closing, the study found.
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Ken Mulkearn, of IDS, said: "It looks like 3% might be a floor for a significant portion of pay awards in manufacturing, and services could be following suit.

"Many manufacturing awards are the result of collective bargaining with unions, especially in January, and this is doubtless a key factor.

"It will be interesting to see whether the same trends on settlements continue into April, which is the key period for pay reviews in services.

"The fact that inflation is coming down might help ease the pressure on negotiators, though the pace and extent of the fall is impossible to predict, and in some instances there may be pressure for catch-up awards after several years of below-inflation increases."

TUC general secretary Brendan Barber said: "This latest rise in pay settlements is great news for workers and positive for the economy too.

"Having suffered several years of real terms pay cuts and recent tax rises, employees need a long period of decent pay growth to make up for lost ground."

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