2012: pay rises set to increase, says XpertHR

PAY DATA

2012: pay rises set to increase, says XpertHR

Private sector employers are predicting that pay deals in the forthcoming wage round will be higher than last year, according to new analysis from pay specialists XpertHR. Basic pay rises are forecast to reach 2.5% (at the median in the year to 31 August 2012), above the median figure of 2.3% seen during 2011.

Based on a survey of 286 private sector respondents - who were able to report on their pay intentions for 800,000 employees - the results reveal that half of all pay awards are expected to be worth between 2% and 3%. But inflation is likely to continue to outstrip pay rises. While RPI inflation is expected to average 3.6% over the course of 2012, just 16% of pay awards are expected to be at or above this level.

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Key survey results

  • Pay freezes are anticipated for one in ten employee groups.

  • Only around one in 20 pay awards is forecast to be worth 5% or more.

  • Just one in ten respondents expects their next pay rise to be at a lower level than the award in 2010/11.

Pay forecasts by sector

  • Manufacturing employers are predicting higher pay rises - of 3% - during 2012 than their services sector counterparts - 2.25%.

  • The highest pay awards - a median 3% - are forecast by employers in the chemicals, engineering, and utilities sectors.

  • The lowest pay awards - a median 2% - are predicted by those operating in the not-for-profit, retail, and construction sectors.

Role of inflation in pay setting

With the coalition government targeting consumer prices index (CPI) inflation, the research set out to find out which measure pay setters traditionally use:

  • As many as 79% refer to the retail prices index (RPI), but 55% also use CPI.

  • However in few (less than one in 10) organisations is inflation directly linked to the specific level of a pay rise.

A final word

"Pay award levels have been subdued for several years now, and although a median pay increase of 2.5% in 2012 is above the levels we are currently seeing, it is still well below pre-recession levels, and inflation. October is the most common month for setting the pay review budget - employees can only hope that their employer is looking at the latest inflation figures, rather than the forecast falls in early 2012." - Sheila Attwood, XpertHR Pay and Benefits editor.

Want to know more?

Title: “Annual review of pay prospects 2011/12”, XpertHR upfront, 4 November 2011.

Survey details: The research is based on the pay intentions of 286 private sector companies, collectively employing more than 800,000 staff.

Availability: To subscribe online visit http://forms.xperthr.co.uk/content/xhr-subscribe-today.

Available to HR professionals as a subscription service, XpertHR offers detailed statistics and analysis of recent pay settlements across the UK. To find out more visit www.xperthr.co.uk.