Tax & Accounting News

Pay Rises Hit Record Low

18/09/2009

Average pay increases offered by firms in the UK have dipped to around one per cent – the lowest figure since records began.

The figures for the quarter to July 2009 were revealed by pay analysts Incomes Data Services (IDS), and marked a drop from the two per cent average figure which had previously been holding steady for several months.

In fact, according to IDS, few pay rises were at the one per cent level, but around half of all firms surveyed had introduced wage freezes due to the recession, cancelling out pay rises elsewhere of around two per cent.

IDS said the current figure was the lowest since it started recording figures in 1994, but pointed out this could be at least partly due to far lower inflation now than in the 1980s and 1990s, as a significant number of wage settlements were related to the Retail Price Index which is currently in negative territory, and even the alternative Consumer Price Index is at a historically low level of 1.8 per cent.

In the year to July 2009, the median pay settlement taken across 545 deals was 2.3 per cent, with a little under a third of those deals being pay freezes.

IDS pay report editor Ken Mulkearn 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.”