XpertHR research: Private sector pay rises set to increase

Employee pay rises in the private sector are set to increase, according to research from XpertHR.

The report, which looked at 99 pay awards settled in the three months to the end of January 2011, found that the median basic pay deal in the three months to the end of January 2011 was unchanged at 2%.

However, there are signs pay awards are on the up. For instance, the upper quartile pay award (marking the top 25% of deals) has moved upwards from a revised 2.3% to 3%; almost seven in 10 deals (69%) are higher than the previous deal for the same group; and when weighted by employee numbers, the median pay award is 3%.

Other key findings include that service sector deals will move ahead of manufacturing. The median pay deal in the manufacturing sector is 2%, but the services sector median has risen to 2.5%, up from 2% the previous rolling quarter.

Pay freezes are still present but have reduced in number. Just over one in 10 (14%) pay awards freeze pay rates, slightly down on the previous rolling quarter.

The most common award is 2% but one in ten are worth 4% or more. Looking through the range of pay deals, the most common single basic award is 2%, the value of 27% of deals, while a further 16% of awards are worth 2.5%. A further 15% of deals were set at 3%, while 10% of basic deals increased pay by 4% or more.

Sarah Welfare, pay and benefits editor at XpertHR, said: “While there are signs pay awards are slowly recovering from the recession as we would expect, we are certainly seeing no evidence of rapid pay inflation in the private sector.

“The going rate for pay deals is still far below pre-recession levels of 3% to 3.5%. Employees may increasingly be asking for pay rises that come closer to the cost of living, but few employers are setting pay rises worth even half that level.”

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