Alastair Hatchett IDS Head of Pay and HR Services

Current pressures on pay• Most pay rises have lagged behind inflation over

recent years

• There has been a substantial fall in household incomes since 2008

• Large companies have become cash rich but weak economic outlook means strict cash controls

• IDSPay.co.uk finds a median pay rise of 2% in 2010, 2.5% in 2011 rising to 3% in 2012 (in the first months)

• Recession and austerity has been uneven: some sectors had freezes while others did not

2

3

Distribution of pay settlements: IDSPay.co.uk

Expected trends in 2012• Manufacturing more optimistic about 2012, after

slowdown in autumn 2011

• RPI inflation to fall, while modest rise in growth

• Private sector pay at 2.5 to 3.5%, with 22% of deals at 4%+

• Minimum wage to rise by 1.8% in October 2012

• Public sector largely frozen in 2012

• Pay review bodies to research regional pay variations

• Private sector awards may match or exceed inflation in 2013

4

Public & private sector rates of pay growth 2005-11

5

(Average Weekly Earnings: total pay, not seasonally adjusted)

Source: ONS

Recent pay deals in the private sector: IDSPay

Company Pay increase

Iceland Foods 5% October 2011

Jaguar Land Rover 6.1% November 2011

Ford 6% November 2011

Network Rail 5.7% January 2012

BT 3% January 2012

6

Bonus payments in 2000-2011: source ONS

7

Average Weekly Earnings by sector: source ONS

8

Varied experiences of pay and bonuses

• Finance sector has had salary rises each year, but lower bonuses

• High end retail and supermarkets had no pay freezes and good bonuses

• Car industry had freezes and short-time in 2009 but record exports in 2011 and recent pay rises of 5 and 6%

• Construction had widespread freezes over two years and some low rises recently

• Lower paying sectors have followed minimum wage rises of 2.2 to 2.5%

• Public sector pay frozen for 2 years and then capped at 1%

9