Thaw has begun on employee pay freezes

CIPD:” The number of pay freezes has fallen in the three months to January 2014, suggesting a thaw around wage increases, according to research from reward specialists Incomes Data Services (IDS). Figures showed that the median pay award for employees had risen to 2.5 per cent in this period following a rise in the proportion of higher-level pay increases and a drop in the number of awards below 2 per cent. The median was last at 2.5 per cent in the three months to June 2013.

Pay freezes and awards below 2 per cent accounted for just 6 per cent of all settlements, down from 36 per cent in the three months to December 2013. This also represents the lowest proportion of pay settlements at this level since the beginning of 2012.

Pay awards of 3 per cent and above have almost doubled since the last three-month rolling period to December, with wage rises at this level accounting for 30 per cent of settlements in the three months to the end of January 2014. However, awards at this level are confined to a small number of sectors including care services and leisure.

The IDS figures also show an increase in the proportion of awards between 2 and 2.99 per cent, with nearly a quarter of awards at exactly 2 per cent and a further quarter at 2.5 per cent.

Ken Mulkearn, head of pay and research at IDS, said: “Signs of a more positive economic picture and an improving labour market are slowly beginning to feed through to annual pay increases, particularly in the manufacturing sector. The median pay award has risen but it remains behind RPI inflation, which has risen to 2.8 per cent.”

IDS analysed 50 pay awards affecting 139,542 employees in total”.

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