Labour Research - Pay Deals

Wage levels holding steady but new pay deals are suffering

The Labour Research Department (LRD) Payline database shows that the median pay settlement increase for the month of April was just 2%. The three-month median increase from February to April was 2.5%. April also saw a total of 22 pay freezes and three pay cuts recorded on Payline in a single month – the largest number since January, when there were 25 freezes and no cuts (but in January freezes made up only 20% of recorded deals).

There are 53 newly negotiated settlements in April and they show a median increase of 0.5%. Of these, 20 are pay freezes and two are pay cuts. This means that the median increase is being held up by staged agreements whose terms were reached in the past. There are also two cases where a staged increase due in April has been deferred and one where pay has been cut.

On the basis of incomplete figures for May, the monthly rate of increase is 3% and the three-month median increase to May is 2.3%. Only one wage freeze and no pay cuts have been registered on Payline for May.

April traditionally sees large numbers of pay deals, with 104 settlements recorded on Payline. Freezes made up approximately 21% of settlements, while 2.9% were cuts. But May normally sees many fewer deals, which may mean that the May figures are less significant than the April ones.

“April figures, particularly for new deals, show that wages are being hit hard. It is too early and evidence is too limited to be able to say whether the May figures reflect any change in the economic pressure on employers and union negotiators or any signs that the recession may be turning a corner,” said Lewis Emery, LRD’s pay and conditions researcher. “But it is also clear that some good pay deals are still being done,” he added.

Both April and May have seen a number of pay deals coming in at levels considerably above inflation, reflecting the very mixed picture on pay at the moment, and explaining why overall medians are remaining fairly steady in relation to inflation measures.

Examples of good deals include Hull Trains (7.41%, the second stage of a two-year deal) and Stagecoach (Peterborough) drivers (6.25% for the year to April 2010). Eggborough Power Station has agreed a 3.66% deal with workers in the first stage of a new three-year deal. And Community Housing Group workers will get 5%.