Guest Blogpost from Richard Lynch: Things are still tough on the pay front

The latest research on settlements shows that things continue to be tough on the pay front, with increases still running at around half the rate of inflation and only tentative signs that 2012 may be better than last year.

The most recent figures for the main pay research organisations are for the three months to end December 2011 and these (together with figures to end November) show the following:

Income Data Services (IDS)                 –        2.5% (2.3%)

Labour Research Department (LRD)      –        2.5% (2.5%)

XpertHR (previously IRS)                      –        2.5% (2.0%)

These median figures hide differences between economic sectors with IDS, for example, showing a 3.1% increase in manufacturing and production but only a 0.9% increase in the not-for-profit sector and widespread pay freezes in the public sector.

However, both IDS and LRD say that initial figures for January show that most settlements are around 3% and that if this trend continues, it could help arrest the fall in real wages which we have been experiencing in recent years.

The latest figures from the Office for National Statistics (ONS) are for the three months to end November 2011 and these (together with the figures for end October in brackets below) are less encouraging:

Average total pay (including bonuses)            –        1.9% (2.1%)

Average regular pay (excluding bonuses)       –        1.9% (1.8%)

Average total pay, according to the ONS, is now £464 a week and average regular pay is £438 a week. LRD figures say that average full-time pay is now £618 a week.

Of course, the tentative signs that things may be getting better this year do not apply to the public sector, where pay freezes are still commonplace and a 1% cap on increases and regional pay rates are being threatened for the future. However, George Osborne’s regional pay proposals are coming in for heavy flak from businesses and MPs, as well as unions, on the grounds that lower wages for public sector workers will reduce demand and damage local economies.

By the way, Osborne’s justification for regional pay is that the state paying higher wages than many private firms in the poorer parts of the country is “suppressing the availability of labour for companies” and thereby damaging the economy. With an average of almost six people chasing every job vacancy, I hadn’t realised that there was a shortage of labour in the economy!

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.

GUEST BLOG POST FROM RICHARD LYNCH ON PAY AND INFLATION

Pay is still not catching up with inflation

Pay settlements have been improving in some parts of the private sector of late but pay freezes abound in the public sector and the gap between pay and prices is getting wider. The latest median pay settlement figures from the main research organisations, for the three months to end September 2011 (with end August figures in brackets), are as follows:

Income Data Services (IDS) – 2.4% (2.5%)

Labour Research Department (LRD) – 2.5% (2.5%)

XpertHR (previously IRS) – 2.0% (2.0%)

The latest Office for National Statistics figures, for the three months to end August (with end July figures in brackets), show:

Average total pay (including bonuses) – 2.8% (2.8%)

Average regular pay (excluding bonuses) – 1.8% (2.1%)

According to the ONS, average total pay in August was £463 a week and average regular pay was £435 a week. According to LRD, average full-time pay was £618 a week in September.

All of the research organisations are suggesting that pay is beginning to look up in parts of the private sector, with IDS reporting that median settlements in manufacturing are now 3%. However, there is also general agreement that that settlements in retail and services are disappointing, with IDS putting them at 2.4% and LRD at 2.2%. There is general agreement as well on the fact that there is virtually no pay movement in the public sector and that the gap between pay increases and inflation increases is now wider than ever.

The pay settlement figures quoted above average out at 2.3% and RPI inflation is 5.6%, giving a gap of 3.3%. And even if the 5.2% figure for the CPI (the cut pay index) is used, the gap is still 2.9%. That’s the extent by which real pay is falling today, while pay for the directors of major companies is rising by 49% a year. Time for a change, I think!

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.