Pay freezes show downward trend

Any new government following the 6 May election may find it hard to sustain public sector pay curbs, new analysis of pay data from Labour Research Department (LRD) indicates.

LRD pay data shows that, following a slight increase in January this year, pay freezes in the private sector have now begun on a downward trend, while pay medians (midpoints) are slowly rising, suggesting the end of concessionary bargaining by unions may be in sight.

An uplift in median pay levels and a reduction in the number of pay freezes, revealed in LRD’s Payline database figures for the three months to April 2010, also suggests that it will be increasingly difficult to impose a pay freeze in the public sector, as all measures of inflation and private sector pay are now rising again following the recession. The Retail Prices Index (RPI) inflation measure, for example, currently stands at 4.4%.

In the private sector, the median (midpoint) pay increase according to LRD’s Payline database of negotiated agreements was 2% in the three months to April, with pay freezes forming 17% of pay settlements. One quarter of private sector pay deals are now being agreed at 3% or more. In the public sector, the median was 2.3%. However, local government employers are attempting to impose a pay freeze on 1.6 million workers and the main political parties are all planning further pay restrictions.

www.lrd.org.uk/issue.php?pagid=1&issueid=1380