Trends in Pay Determination:

What Does WERS Tell Us?

Alex Bryson

Principal Research Fellow, NIESR

Outline

• What is WERS?

• Findings from 2004-2011:

1. Pay Determination

2. Pay Settlements

3. Fringe Benefits

4. Incentive Pay

5. Appraisal

6. Pay Satisfaction

• Summary

• Further information

The Workplace Employment

Relations Survey

• National survey mapping employment relations in

workplaces across Britain.

• Unique and comprehensive: data collected from

managers, worker representatives and employees in

2,680 workplaces with 5+ employees.

• Well-established: 1980, 1984, 1990, 1998, 2004, 2011

• Independent: multiple funding sources.

• Endorsed by a range of employer, union and

independent organisations.

The WERS SURVEYS

Survey of

managers

Survey of worker

representatives

Survey of

employees

Number Per cent Number Per cent Number Per cent

Cross-section workplaces

2004 2,295 64 984 77 22,451 61

2011 2,680 46 1,002 64 21,981 54

Panel workplaces

2004 989 n/a 512 80 10,270 61

2011 989 52 432 66 8,821 55

WERS Data on Bargaining Coverage

• Multiple questions: occupation level pay determination;

pay settlement for largest non-managerial occupation;

stand-alone banded coverage variable. Union recognition

• Research team editing: instances in which pay

determination is known and doesn’t correspond with

manager, eg. PRB. Edited and raw variables deposited

• Consequences: many different ways to cut the data.

Bounded estimates. Might want different measures for

different occasions

• What do I want: consistency over time to identify trends.

NFSOC* variables. May not be the ‘best’ estimate

Collective Bargaining Coverage,

Employment Weighted

Public Private All workplaces

2004 2011 2004 2011 2004 2011

WERS

Bargaining coverage 68 44 16 16 28 23

Employees in workplaces with

recognised unions

94 96 29 31 45 47

LFS

Bargaining coverage 71 68 21 17 35 31

Employees in workplaces with unions 87 87 33 29 48 45

Collective Bargaining Coverage,

Workplace Weighted

Public Sector Private sector All workplaces

2004 2011 2004 2011 2004 2011

Any employees covered by

collective bargaining

70 57 7 7 15 13

All employees covered by

collective bargaining

49 37 4 4 10 8

At least one union recognised 90 92 13 12 22 22

Last pay settlement for core

employees negotiated with a

trade union

40 24 5 4 9 7

Pay Determination (workplace wted) Public sector Private sector All workplaces

2004 2011 2004 2011 2004 2011

Collective Bargaining

Any multi-employer 58 43 2 2 9 7

Any single-employer 14 17 4 3 5 5

Any workplace-level 1 1 2 2 1 2

Other pay determination methods

Any set by management, higher level 23 24 36 42 35 40

Any set by management, workplace 11 9 60 53 54 48

Any set by individual negotiations 2 2 14 15 12 13

Any Pay Review Body 28 35 0 0 4 5

Single method used 68 71 83 83 81 82

Pay set by collective bargaining for every occupational

group present at the workplace

51 38 5 4 10 8

Mix of collective bargaining and other forms of pay

determination

19 18 2 3 4 5

Pay not set by collective bargaining for any occupatio 30 43 93 93 85 87

Decline in Public Sector CB Coverage: why?

• At odds with stability in union recognition

• Due to decline in sectoral collective bargaining

• Rise in Pay Review Body coverage

– % public sector employees working in workplaces where some

employees covered by PRB rose from 21% to 47% between 2004 and

2011

• We treated Agenda for Change in Health as collective bargaining in 2004 –

now back to PRB

– Thus CB coverage down from 75% to 14% in Health

– If we’d treated Health as PRB in 2004 CB coverage would have been

31% not 75% and CB coverage in whole public sector would have fallen

from 54% to 44% instead of 68% to 44%

– Even if Health excluded CB coverage fell from 65% to 55%

• Reporting of CB coverage may have been affected by prevalence of pay

freezes in public sector at time of survey

Whether recognised union normally

negotiates or consults....

Public Sector Private sector All workplaces

2004 2011 2004 2011 2004 2011

Pay 56 (71) 52 (72) 61 (81) 56 (70) 58 (76) 54 (71)

Hours 55 (74) 45 (72) 50 (75) 37 (61) 52 (74) 42 (68)

Holidays 51 (65) 44 (66) 52 (72) 41 (61) 51 (68) 43 (64)

Pensions 34 (54) 38 (62) 38 (59) 24 (55) 36 (56) 33 (59)

Training 10 (48) 17 (54) 13 (32) 6 (42) 11 (40) 13 (49)

Grievances 29 (72) 30 (71) 31 (73) 19 (68) 30 (72) 25 (70)

Health and safety 16 (69) 22 (69) 18 (65) 10 (59) 17 (67) 17 (65)

Mean N items

negotiated

2.5 2.4 2.7 2.0 2.6 2.5

Pay Settlements/reviews

• Union negotiated

– Public sector : 24% in 2011, 40% in 2004

– Private sector: 4% in 2011, 5% in 2004

• Frequency of review < once a year

– Public sector: 16% in 2011, 8% in 2004

– Private sector: 9% in 2011, 6% in 2004

• Pay freeze:

– Public sector: 58% in 2011, 5% 2004

– Private sector: 26% 2011, 12% 2004

– Public admin 78%; Education 58%; Health 56%

– Pay freezes more common where adversely affected by recession

Influences on Last Pay Settlement

0

1

6

0

23

32

33

36

62

13

4

19

14

7

5

13

13

32

26

3

0 10 20 30 40 50 60 70

None of these

Funds

National agreement

Other

Industrial action

Recruitment and retention

Productivity

Minimum wage

Cost of living

Financial performance

Private Public

Non-managerial entitlement to non-pay

fringe benefits (managers in brackets)

Public Sector Private sector All workplaces

2004 2011 2004 2011 2004 2011

Employer pension contribution 94 (94) 92 (90) 52 (60) 41 (49) 57 (64) 47 (54)

Vehicle or allowance 18 (30) 16 (22) 13 (42) 15 (31) 13 (40) 15 (30)

Private health insurance 5 (7) 4 (4) 16 (36) 17 (33) 15 (32) 16 (30)

Sick pay in excess of statutory 72 (74) 81 (80) 48 (57) 44 (51) 51 (59) 49 (55)

None of the above 4 (4) 5 (7) 31 (19) 38 (27) 28 (17) 34 (25)

>28 days paid annual leave (inc

public holidays)

87 (90) 79 (81) 53 (59) 44 (49) 57 (63) 48 (53)

None of these 2 (4) 4 (4) 24 (17) 31 (24) 21 (15) 28 (22)

Workplace Use of Incentives

Public Sector Private sector All workplaces

2004 2011 2004 2011 2004 2011

Any PBR or merit pay 17 17 43 45 40 41

Any payments-by-

results

10 8 34 32 31 29

Any merit pay 10 10 15 23 15 21

Any profit-related pay 1 5 34 33 30 29

Any share schemes 1 4 19 10 16 9

At least one of the above 17 21 59 59 54 55

Employee Receipt of PBR

Public

sector

Private

sector

All

workplaces

Employees in receipt of any performance-

related pay

7 28 23

Employees in receipt of two or more forms of

performance-related pay

1 9 7

Basis for payments

Individual performance or output 5 15 13

Overall performance of a group or team 2 9 8

Overall performance of the workplace or

organisation (e.g. profit-sharing scheme)

1 15 11

Appraisal

25

40

61

49

13

17

25

25

42

58

33

16

25

27

44

57

30

11

0 10 20 30 40 50 60 70

2004

2011

2004

2011

2004

2011

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Public sector Private sector All workplaces

Changes in Job Satisfaction, 2004-11

Summary

• Stability in union recognition, decline in collective bargaining

coverage confined to public sector

• Big increase in pay freezes, especially public sector

• Increase in pay satisfaction in both public and private sectors despite

declining real wages

• Scope of collective bargaining declined in private sector but was

stable in public sector

• Fall in entitlement to fringe benefits confined to private sector

• Reduced frequency of pay review

• Importance on NMW as influence on pay settlements

• Fairly low incidence of performance pay but increase in use of

appraisal including appraisals linked to pay

Further Information

• First Findings (2nd edition), and

transparency data, can be

downloaded from:

https://www.gov.uk/government/p

ublications/the-2011-workplace-

employment-relations-study-wers

• WERS data available from UK

Data Service.

• 2011 WERS book available from

Palgrave Macmillan in November.