Guest Blogpost from Richard Lynch: “Mixed picture on pay”

The latest statistics show a mixed picture on pay, with figures from the pay research organisations reporting a continued improvement on last year but Office for National Statistics figures apparently going in the opposite direction.

The pay research organisations’ median settlement figures for the three months to end February 2012 (with end January figures in brackets) show the following:

Income Data Services (IDS)                                          –              3.0% (3.0%)

Labour Research Department (LRD)                        –              3.0% (3.0%)

XpertHR (formerly IRS)                                                  –              2.6% (3.0%)

Office for National Statistics figures had been expected (by this writer, at least) to follow the pattern above but their latest figures, for the three months to end January 2012, were down on the previous month’s figures, as outlined below:

Average total pay (including bonuses)                    –              1.4% (1.9%)

Average regular pay (excluding bonuses)             –              1.7% (1.9%)

According to the ONS figures, average total pay in January was £461 a week (£23,972 a year) and average regular pay was £438 a week (£22,776 a year). According to LRD, average full-time pay is £606.70 a week (£31,548.40 a year).

Both IDS and LRD believe that 3% is likely to become established as the going rate for private sector settlements in 2012. This view is backed up by Towers Watson Data Services, which expect companies in the UK and Europe to raise pay by an average of 3% this year. XpertHR, however, is more pessimistic and expects 2012 settlements to fall to around 2%, with the introduction of pension auto-enrolment in big companies in October likely to depress pay increases.

Of course the figures above relate mainly to the private sector and pay increases in the public sector are still more of an aspiration than an expectation. With most pay freezes in that sector now in their third year, it was something of a surprise for the Office for National Statistics to announce recently that the gap between hourly rates in the public and private sectors was widening, with rates in the former now 8.2% higher than those in the latter. One possible explanation for this is that low-paid jobs (cleaning, catering, waste disposal, caretaking etc) have been increasingly outsourced by the public sector, leaving a larger proportion of higher-grade roles in the public sector than before. The increased proportion of private sector employees having to do part-time work, due to lack of full time roles, is another possible explanation.

And of course there is a lot of almost criminally low pay in retail, hairdressing, security and other parts of the private sector. This will not be helped by this month’s decision to freeze the National Minimum Wage for young workers and to increase it by only 11p an hour for workers aged 21 and above.

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.

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