Pay rises slip to record low
Average pay increases offered by UK firms have dipped to just 1 per cent, the lowest figure since records began.
The fall is largely the result of the pay freezes imposed by many employers struggling to cope with the recession.
According to Incomes Data Services (IDS), the pay analysts, median pay settlements in the quarter to July slid to 1 per cent, down from the 2 per cent at which deals had been holding for several months.
IDS first started recording pay settlement levels in 1994, and the current figure is the lowest yet registered.
However, it could be the lowest average pay rise rate for decades, IDS went on to say, because price inflation was much higher in the 1980s and 1990s than it is now.
In fact, IDS pointed out, very few pay deals were being agreed at the 1 per cent level, with almost half of deals wage freezes and the remainder coming in at about 2 per cent.
A significant number of wage settlements are related to the retail price index inflation rate which is now in negative territory.
Despite consumer price index inflation still running at 1.8 per cent, fewer pay deals were agreed in the summer than in the spring.
In the year to the end of July 2009, the median pay settlement taken across 545 deals was 2.3 per cent. A little under a third of those were pay freezes; but now the proportion is approaching a half.
Ken Mulkearn, IDS pay report editor, said: “When we were monitoring relatively large numbers of deals overall, these acted as a counterweight between the two sides of the scale. The number of deals monitored has now fallen sharply, and the continued large proportion of freezes has weighed slightly heavier in the balance.”