News

Pay continues to climb: public/private sector split

Still we see reports of pay growth – most recently from the Office of National Statistics who report that, despite increasing unemployment, the whole economy earnings annual growth rate rose to 2.6% for the 3 months to June 2011, compared to 2.3% for the 3 months to May 2011. This upward movement was primarily, and not surprisingly taking place amongst private sector employees.

If that is so a key driving area is unlikely to have been in the retail sector where the Retail Gazette reports that just over 50% of employees have had a pay freeze or even had their pay cut, although this disguises some marked intra-sector differences. 64% of those working in e-retail and for multi-channel retailers received pay rises; over half received rises in fashion retail compared to 42%in department stores and only 38% in the DIY sector. The Retail Gazette comments: “Retailers are rightly keeping their eye on the bottom line, but they need to make sure that the way they treat and reward staff is not contributing to their struggles in the first place.” This is a message that can be well taken on board by employers in any sector.

In the latest Reward Management Survey published by the CIPD they report that market positioning of pay is becoming more common again, as was the case before the recession. Over half of respondents to their survey were looking to position their pay at market midpoint and they regard market rates as the most important factor in determining pay levels. Ensuring that reward is market competitive therefore is one of the key reward priorities for these organisations in 2011.

If you need assistance in the market positioning of your pay levels we at CELRE Consultancy are ideally placed to help you. Do you know where you stand in pay terms compared to the market? If not, let us help you.

Economics

This year’s pay reviews are taking place against a background of mixed economic indicators. Inflation has seen a period of volatility unprecedented in recent times moving from negative territory in late 2009, to peak at 5.3% in April 2010. Having initially fallen back February 2011 saw a continuation of January’s climb to 5.5%, followed by a fall in June to 5.0%, remaining at this level in July. The general consensus remains that RPI will fall during this year  and the forecast of 5.3% for Q3 2011 may be a little high at this point, given that RPI is forecast to fall during 2012. This is key, as most negotiators will seek to focus on the forecast RPI, rather than its current level when settling pay awards.

Pay Bargaining Stats – August 2011

Inflation

Headline inflation

Retail prices index (RPI): 5.0% (July 2011) 
Next release date: 13 September 2011.

Underlying inflation

Retail prices index excluding mortgage interest payments (RPIX): 5.0% (July 2011) 
Next release date: 13 September 2011.

Consumer prices

Consumer prices index (CPI): 4.4% (July 2011) 
Next release date: 13 September 2011.

Inflation forecasts

Q3 2011: average 5.4%; Q4 2011: 5.2%
Next release date: 14 September 2011.

Pay Settlements

Xpert HR  headline pay measure

The XpertHR measure of pay awards - the midpoint in the range of basic pay deals - stands at 2.0% in the three months to 31 July 2011, down 0.2% from the revised figure for the previous rolling quarter, according to the latest provisional analysis. The inter quartile range stands between 0.8% and 3%.

Next release date: 23 September 2011.

Engineering and manufacturing (EEF)

Average settlements for three months ending 31 July 2011:  2.7%
Next release date: 23 September 2011.

Manufacturing and services (LRD)

Median settlement levels for three months ending 31 July 2011: 2.6% (manufacturing);  3.0% (services) 
Next release date: 23 September 2011.