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Pay awards more than four times higher than inflation

Pay awards more than four times higher than inflation

Employees are currently enjoying pay rises worth more than four times inflation, according to figures released by Industrial Relations Services (IRS).

The median basic pay rise for the three months to December 2008 is 3.8%, while retail prices index (RPI) inflation for the same month was reported by the ONS to be just 0.9%. Pay rises have not been this far above RPI inflation since August 1986.

However, pay awards are unlikely to stay at this elevated level as January pay bargaining gets underway. An early look at pay awards in the three months to January 2009 reveals that pay awards have already slipped to 3%.
Key findings
Headline findings on basic pay awards for the three months to 31 December 2008, based on 62 pay awards, reveals the following:

 Range of pay awards widens considerably. Pay awards are now very widely spread. The lower quartile, below which a quarter of pay deals lie, is unchanged at 3%, but the upper quartile, marking the cut-off point for the highest 25% of deals, has risen to 4.8%. Therefore half of all pay deals are worth between 3% and 4.8%, up from the 3% to 4.3% range recorded in the previous rolling quarter.

 Clear majority of pay deals higher. Further evidence of discrepancies in pay deals is provided by the finding that currently a massive 70.6% of pay deals are higher than the award received by the same group of employees in the previous year. The remaining deals are split evenly between those that awarded the same rise, and those paying a lower increase. This group includes several bargaining groups that have benefited from inflation-linked deals, based on the high levels of RPI seen in autumn 2008.

 Private sector pay awards stable. Private sector pay awards, which account for the majority of all pay deals in the final months of the year, mirror the whole economy figure at a median basic pay rise of 3.8% in the three months to the end of December 2008.

 Public sector pay awards. In the year to 31 December 2008, the median basic public sector pay award stood at 2.5%, one percentage point below the 3.5% recorded for the private sector over the same period.

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