News

Let’s consider the key statistics

Pay

There is no question that pay awards have rebounded from their all time low in July and August 2009 when IRS was reporting a median of zero increase. The current median, in the 3 months to December 2009,stands at 1.2% with the headline figure above 1% for the last four months.

On further analysis however, it is evident that the most severe cut backs in pay increases have been taking place in the private sector whilst the public sector has remained relatively unscathed. With the election in sight and political parties queuing up to tell us how tough they will be on public sector pay this is set to change. Many public sector workers can look forward to low increases or even pay freezes in 2010. In addition, the prospect of restructuring could see further cuts in public sector jobs as the government wrestles to control its finances.

In the private sector, based on a recent IRS survey, employers seem to fall into one of two camps. Those still struggling with business conditions and contemplating yet another year of pay freezes and those who are beginning to see some signs of recovery and may be prepared to agree to some modest increases.

The Labour Market

With unemployment set to continue rising at least in the first half of 2010 (CIPD forecast a peak at 2.8 million in the summer) this will continue to have a downward influence on pay awards. The Treasury’s forecast is somewhat more optimistic suggesting a peak “claimant count” of 1.75 million in 2010 falling back to 1.5 million by the end of 2011 (still almost double what it was in January 2008).

Inflation

With RPI hitting 2.4% in December (up from 0.3% in November)and forecasts expecting it to average 2.8% in the first quarter of this year and 3.1% in the second quarter. This will clearly place an upward pressure on pay, not present in 2009 when we witnessed negative inflation for much of the year.

In Summary

Given the scenario we face it is unlikely we will see any significant increase in the value of pay awards in 2010. However, employers will come under increasing pressure, as the economy recovers and inflation begins to rise, from employees who are unwilling to accept another year of pay freeze.

Time to take stock

CELRE Consulting would advise this is a time to take stock. The economic climate has undoubtedly meant your top performers have stayed put to weather the storm but may start to look for new opportunities when circumstances permit.

Research from Price Waterhouse Coopers indicated that as many as 1 in 3 employees felt that their employer did not value them during the recession and would consider leaving for another job when circumstances permit.

HR managers are continuing to come under pressure to demonstrate that investment in reward is providing value for money, whilst ensuring maximum return in line with corporate objectives.

In this context the importance of benchmarking your current pay and benefits practices, reviewing the way in which the reward budget is spent and considering your general approach to reward and recognition takes on even more significance.

We are well placed to help you with this. We are leading experts in the design and delivery of reward and benefits strategy. In addition, we are the only consultancy who works in conjunction with CELRE Salary Surveys (part of Xpert HR). Their surveys attract very high rates of participation (over 600 organisations contributing data for in excess of 100,000 job holders) resulting in a massive database from which to draw comparisons.

How to contact us

Check out our website for a full list of our services at www.celreconsult.co.uk

Alternatively call us on 08453 110 110 or email us at info@celreconsult.co.uk to discuss our services and your requirements with one of our consultants, either by phone or face to face if preferred.

Give us a try - we are happy to offer you a free consultation with a consultant to discuss your most pressing reward problem.