News

Pay remains an issue for employers

So we approach the end of 2011 and we would like to thank our many clients who have sought our assistance over the past 12 months. We hope to be of assistance both to them and to YOU in 2012 which we hope will be a prosperous and successful year for us all.

Pay has remained a consideration and concern for employers throughout 2011 and looks set to continue to be so going forward (and we don’t just mean “fat cat” pay rises either). Hays have recently reported that small businesses may be failing to attract talented employees due to concerns on the part of job applicants about pay and benefits despite the often greater job satisfaction and involvement possible when working within a smaller, tight-knit organisation.

With the news that public sector pay rises are to be restricted to 1% for 2012 and 2013 it is also noteworthy that the Government will be asking pay review bodies to assess how pay can be better aligned with local pay markets. This is something that many of our clients in all employment sectors are concerned about and reports that 59% of employers plan to grow their permanent staff in the coming year is likely to place even more focus on pay competitiveness.

So the market positioning of pay is becoming more common again, as was reported in the last Reward Management from the CIPD. This was repeated in the findings of the HR Reward Survey carried out by HR Magazine where base salary competitiveness was recorded as the highest reward priority for organisations in 2011. Ensuring that reward is market competitive therefore will be one of the key reward priorities for very many organisations in 2012 and going forward.

A supporting consideration to this is the question of how often should you review your pay arrangements to ensure that they remain market competitive? We would recommend that an annual review should be carried out or at the very least once every 2 years.
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 have been 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 5.6% in September 2011. The forecast of 5.3% for Q4 2011 is now looking fairly reliable, but 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 – December 2011

Inflation

Headline inflation
Retail prices index (RPI): 5.2% (November 2011)
Next release date: 17 January 2012.

Underlying inflation
Retail prices index excluding mortgage interest payments (RPIX): 5.3% (November 2011)
Next release date: 17 January 2012.

Consumer prices
Consumer prices index (CPI): 4.8% (November 2011)
Next release date: 17 January 2012.

Inflation forecasts
Q1 2012: 4.1%; Q2 2012: 3.6%
Next release date: 20 January 2012.

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 30 November 2011, unchanged from the revised figure for the previous rolling quarter, according to the latest provisional analysis. The inter quartile range stands between nil and 2.5%.
Next release date: 20 January 2012.

Engineering and manufacturing (EEF)
Average settlements for three months ending 30 November 2011:  2.5%
Next release date: 20 January 2012.

Manufacturing and services (LRD)
Median settlement levels for three months ending 30 November 2011: 2.5% (manufacturing);  2.2% (services)
Next release date: 20 January 2012.