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Pay Update - 15th January 2013

Surveys

1.    2012 ends with low pay growth
According to the survey released by XpertHR at the end of 2012, pay awards have failed to show sustained growth in the last months of the year. The survey, based on 1,600 pay settlements until the end of November 2012, indicates that the median pay increase stood at 2% in the three months to the end of November, unchanged from the previous month. XpertHR’s data also showed that in the same period almost a quarter (23%) of pay awards resulted in a pay freeze.

For more information click here.

2.    Executive pay steadily increasing, but needs to be linked to non-financial measures
Three reports were published about executive remuneration at the start of the new year. Two of these, published by Towers Watson, demonstrate that executive pay rises have started to align with levels for other employees. Data from the Executive pay pulse survey and 2012 UK top executive survey shows that pay increase for executives will be around 3% this year, similar to the last few years.

The third survey aims to draw attention to the failure of British firms to link key areas of non-financial performance that improve long term success to chief executive’s pay. Paid to perform? was published by the High Pay Commission, and it points out that the key to long-term sustainability is developing great products and brands, while also putting emphasis on customer satisfaction. The report calls for the linking of at least half of chief executives’ performance-related pay to non-financial benchmarks and for employee representatives on company boards to challenge short-termism in financial decisions.

For more detail click here and here.

3.    Internal communications more important than pay
Research from Jelf Employee Benefits suggests that internal communication is valued over pay and benefits when it comes to engaging employees. More than a quarter (29.5%) of surveyed staff believes that poor internal communications are the most detrimental to employee engagement, followed by low pay and poor benefit packages.

For more detail click here.

4.    More opportunities, less pay
According to the Reed Job Index the employment market is 10% stronger than it was this time last year, with opportunities for jobseekers reaching a three-year high. However, they also report that the salary for new jobs has declined by 1% over the year.

For more information click here.

Pay Update- 6th December

Government Plans & Other Political Proposals

1.    Autumn Statement: employment is growing
George Osborne, Chancellor of the Exchequer, delivered the Autumn Statement on the state of the economy yesterday. He insisted that the British economy is healing; however, he also warned that austerity measures will be necessary until 2017-2018, as the economy is weaker than expected. When it comes to employment, the Chancellor pointed out that it has grown more strongly than forecasts predicted and it will continue to grow. He claimed that 1.2 million jobs have been created in the private sector since the Coalition government was elected in 2010. When it comes to the public sector Osborne predicted a 1% pay rise for those who have seen their basic pay frozen. Furthermore, the idea of centrally determined local pay rates or zones in the public sector was rejected, opting for a continuation of national pay arrangements in the NHS, the Prison Service and in the civil service as well.
The statement also outlined consultations by the government on the proposal for schools to have the freedom to set pay in line with performance. This will be based on the recommendations of the School Teachers’ Review Body that would like to see a pay framework that raises the status of the profession and reward individuals in line with their contribution.

For reviews of the Autumn Statement click here and here.
For more detail on recommendations regarding pay in schools click here.

2.    Brighton & Hove Council signs up to living wage
The council in Brighton & Hove has approved proposals to meet the new Living Wage rate of £7.45 / hour for their lowest paid staff, and seek national accreditation as a Living Wage employer. This comes after the council increased the hourly wage of its lowest paid staff to £7.19 in September. The new living wage rate was recommended by the national Living Wage Foundation in October this year.

For more detail click here.

Surveys

1.    Pay growth slows
According to the latest research by XpertHR the median basic pay increase was only 1.8% in the three months to the end of October. This has led to the gap between RPI inflation (rising to 3.2% over the same period) and pay awards growing for the first time since April 2012. The fall in the level of pay settlement comes as some companies continue to freeze pay, while others are cautious with their increases. The private sector median pay increase was slightly higher, at 2%, but still lower than last year. Forecasts for the next year show improvement, as Xpert HR’s survey of private sector employees predicts a 2.5% increase over the year to the end of August 2013.

For more detail click here.

2.    Private services pay awards continue to lag behind the manufacturing sector
According to data from the Incomes Data Service the gap between pay awards in private sector services and manufacturing and utilities has widened over the three months to the end of October. Private services pay awards are down to 2% (from 2.2%) due to lower pay settlements in retail and fast food and care services, while the median for the manufacturing sector has increased to 3% (from 2.7%). When it comes to the whole economy, the overall median pay award has fallen to 2% (from 2.5%).

For more detail click here.

3.    3% pay rise predicted for 2013
Salary Movement Snapshot, a report with research by Mercer, shows that employers at UK companies anticipate an employee pay rise of 3% in 2013. This rate is higher than the rate of inflation predicted by the Bank of England for the same year, which is a positive outlook for households across the country. Mercer’s survey provides information on median base pay increase across all employee groups up to management and Senior Executive level.

For more detail click here.

4.    Chief Executive pay boom over the past decade
According to the High Pay Centre chief executive pay has increased by 12% in the last financial year and almost trebled over the past ten years. The Centre pointed out that shareholders are finding it difficult to reduce excessive payments, despite action promised by the government on the issue.

For more detail click here.

5.    Gender pay gap falls
The Office of National Statistics has published its annual survey of hours and earnings, which contains figures that show that the pay gap between men and women has shrunk to 9.6% (down from 10.5%). The ONS data also demonstrates an increase of 1.4% (to £26,500) in the average annual earnings of full time workers in the year to April 2012.

For more detail click here.

6.    Experience pays off
According to a report by Towers Watson, pay in entry level and clerical roles stagnates in 2012, while experienced workers s saw pay rises. The Global 50 Remuneration Planning Report shows that experienced professionals enjoyed average pay rises of 6%, while the pay rises of those in entry level and clerical roles averaged almost 1% and zero respectively.

For more detail click here.

CIPD releases Labour Market Outlook for Autumn 2012

The latest Labour Market Outlook survey, released by the Chartered Institute of Personnel and Development (CIPD), shows improving pay prospects across the economy. According to the survey, basic pay award expectations for the next 12 months have edged up from 1.6% to 1.7%. Public sector’s pay award expectations have increased from 0.2% to 0.6%, partly due to the imminent ending of the two-year pay freeze in the sector. Private sector firms participating in the survey predict a 2.6% average pay increase for their sector, which is also higher than expectations in the previous report. Within the private sector, service firms predict an average 3.2% rise, while the manufacturing sector forecasts a 2.5% average. The number of organisations predicting a pay freeze in the private sector has also fallen from 11% to 7%. However, 59% of private sector employers are unable to predict how their average pay will change.

To read the whole survey click here.

Pay Update- 16th November

Government Plans & Other Political Proposals

1.    Living wage proposals on both sides
Ed Miliband, the leader of the opposition, has revealed that if Labour wins the next election, they will try and give millions of people a “living wage” of at least £7.45. He explained that one way they plan to give incentive to companies to increase the “living wage” is through tax breaks. Boris Johnson, Conservative mayor of London, has also expressed his views on the issue, announcing that the living wage rate for workers in London will increase by 25p (to £8.55) because of the higher cost of living in the city. He pointed out that companies should recognize the benefits of paying employees the living wage.

For more details click here.

Surveys

1.    Fifth of UK workers earn less than ‘living wage’
New research from accountancy firm KPMG has revealed that one in five workers in the UK are paid less than the ‘living wage’. The survey shows that the greatest number of people receiving less than the living wage lived in London and the north-west (570,000 each), and the south-east (530,000). The positions that are more likely to pay below the living wage are bar staff, followed by waiters and waitresses.

For more details click here.

2.    Employers predict 2.5% pay increase for 2013
According to a recent survey by XpertHR, private sector workers are expected to receive a 2.5% median pay rise next year. Seven pay awards out of ten are likely to be between 2 and 3%. Pay freezes will account for less than 10% of all pay awards. The survey also shows that salary increases were influenced primarily by company performance and their ability to pay (92.5%), followed by inflation levels (79.5%). XpertHR’s data also demonstrates that the gap between private sector pay awards and inflation has fallen to 0.3, which, they claim, may be as close as it gets.

For more details click here.

3.    Gender pay gap continues
A report by the Chartered Management Institute (CMI), based on data provided by XpertHR, shows that average salaries for female executives were £10,600 less than those of their male counterparts. Furthermore, women received less than half of what men get in bonuses. The report concludes that an average female executive will earn £400,000 less over her career lifetime, than a man would. When it comes to the regional level, this pay gap is the widest in London and the smallest in Northern Ireland.

For more details click here.

4.    Executive pay and bonus growth comes to a halt
Basic pay and bonus growth for FTSE-100 directors has come to a halt, with bonuses down on the previous year. This was revealed by the latest report by the Incomes Data Service, published in the beginning of November. It also showed, however, that due to the significant rise in the value of vested long term incentive plans (LTIPs) awards, median total earnings have still increased markedly (up 10%). The median total earnings of FTSE-100 CEOs was £3.2 million, while the average was £4 million.
Another study, titled London, city and regional prospects (carried out by the Centre for Economics and Business Research), also talks about the fall in bonuses, pointing out that bonuses for City employees over the Christmas period will be down to £1.6 billion, which is less than the estimate made six months ago (£2.3 billion).

For more details click here and here.

Pay Update- 25th October

Government plans and measures

1.    Liberal Democrats say no to regional pay
The annual conference of the Liberal Democrats, held in Brighton, has voted against the introduction of regional pay in the public sector. Concerns over its disproportionately adverse effect on areas with low average incomes and the risk of a future “brain drain” (skilled workers moving to higher salary regions) have led to the rejection of the idea. This might put the smaller party of the coalition government on a potential collision course with the Conservatives.

For more details click here.

2.    Pay freeze for some non-medical NHS staff is to continue
The NHS Employers organisation has announced in its evidence to the Pay Review Body, released on 23 October, that no across-the-board pay rise can be expected for more than one million non-medical NHS staff in 2013/2014. However, more than 60% of nurses, midwifes, administrators and other ancillary professions covered by the PRB will receive a wage increase, because of their entitlement to climb the pay scale by an incremental point.

For more details click here.

Surveys

1.    Income squeeze more intense than in previous recessions
The effect of the recent recession on workers’ real term wages in the UK has been worse than in previous economic downturns. According to the Office for National Statistics the net national income per person across the country in the second quarter of 2012 was 13.2% below the level before the recession, in the first quarter of 2008. High inflation has also impacted on households’ finances in the last few years, peaking at 5.2% in September 2011, whereas the rise in household income per person only reached 1.9% at that time.

For more details click here.

2.    Engagement and motivation are now the top priorities for reward professionals
According to the latest Reward risk survey by the Chartered Institute of Personnel and Development (CIPD), attraction and retention are no longer high on the agenda of reward professionals. The leading concern in the top 10 list of concerns is now the failure of employees to appreciate the total reward offered, followed by the problem that staff is no longer engaged by reward. Other important reward risks include incentives not motivating staff and performance and behaviour requirements being inadequately communicated or understood.

For more details click here.

3.    Graduate salaries fall, but internships can help
Graduates who started a job this summer received an average salary that was 13.2% less than last year. A study by the Association of Professional Staffing Companies shows the average salary for graduates to be £22,800. However, university leavers who would like to earn more are advised to do a three month internship. Research from Inspiring Interns has suggested that graduates who undertake a three month long internship could earn £1500 more in their first year of employment, than those graduates who have no work experience.

For more details click here and here.

4.    Unrealistic salary expectations in the finance sector
According to a report by independent City recruitment firm BRUIN Financial surveying 2000 employees and 100 financial services employers in London 67% of employees expect a pay rise in the next 12 months, while only 23% of employers are planning to give them. The report, titled City Horizon, also shows how employers fail to understand the priorities of their staff. 62% of bosses think that job security is the most important factor for them. In reality, only 20% of employees listed job security as the key motivation.
Another survey, carried out by eFinancialCarees, indicates similar response from finance sector workers regarding pay. Their research shows that more than 80% of UK bankers expect a bonus for 2012, with nearly 50% saying that their bonus will be higher than last year. The number of people who do not expect a bonus this year has increased to 18% (from last year’s 11%).

For more details click here and here.

5.    Salary increases at FTSE 250 companies remain flat
Business advisory firm, Deloitte, published its 2012 report on directors’ remuneration in FTSE 250 companies on October 16th. It shows that almost half of FTSE 100 chief executives and more than a third of directors did not get a pay rise last year. The median pay increase for 2012 remained flat at 3%, with around 30% of companies not giving an increase. Bonuses have also declined, from being at 86% of the maximum that may be paid last year to 75%.

For more details click here.

Pay Update- 27th September

Government Plans & Measures

1.    Employment Law Changes
On 1 October 2012, the main rate of the national minimum wage increased to £6.19 (from £6.08). The youth rate and the rate for workers aged 16 to 17 will not change this year. Changes to laws regarding pensions and retirement age will also take effect this month.

For more details click here.

2.    Public sector salaries rise despite freeze
Despite the two-year pay freeze on public sector salaries imposed by George Osborne in June 2010, many public sector workers have still received a pay rise. This was due to the fact that public servants are still entitled to incremental pay rises within their grade’s wage band, even when pay scales have been frozen.

For more details click here.

3.    Employment Tribunal Statistics published
A consultation on plans to reduce the cap on unfair dismissal payouts was launched by the government earlier this month. However, Employment Tribunal Service statistics, released last week, show that the existing cap of £72,300 was only approached by a tiny proportion of unfair dismissal claims in 2011/12.
Figures also seem to indicate that unfair dismissal awards may be decreasing in value, as do several other types of discrimination awards, which have no cap. Discrimination cases that are experiencing a rise in tribunal awards include sexual orientation discrimination, disability discrimination and sex discrimination.

For more details click here.

Surveys

1.    Pay settlements edging closer to inflation
Falling inflation levels are decreasing the gap between pay settlements and inflation. XpertHR’s survey shows that while the median basic pay increase in the private sector remained unchanged on the figure for the three months to July (2.5%), the retail prices index inflation has fallen to 2.9% in August. The median for the whole economy is at 2.4%, which is slightly lower than the public sector figure due to continuing pay freezes in the public sector. IDS reports the median pay settlement to be at 2.5%.

For more details click here and here.

2.    Pay growth slows for directors
According to the latest research by IDS, published on 20th August, FTSE-100 chief executives’ earnings growth has slowed down to 8.5% at the median, although an average rise of 14% indicates that a minority continues to get substantial increases. The report explains the slowdown with a drop in bonus payments which fell by 2% last year.

For more details click here.

3.    Private companies gain competitive edge on executive pay
A recent report published by a consulting firm, Mercer, asserts that inconsistent government policy on executive pay is giving private companies a competitive edge. The report is titled Fair Pay – A desirable and feasible goal and it points out that using shareholders to oversee executive pay is compromised by the failure to apply these changes to all types of organisations.     It recommends that company remuneration policies, institutional investor effectiveness and Remuneration committee effectiveness need attention to make lasting changes.

For more details click here.

4.    Ethnic pay gap grows
According to a study by two researchers, Malcolm Brynin and Ayse Güveli, from the University of Essex, the ethnic pay gap in Britain widened over the last two decades in favour of white workers. They point out, however, that this is probably due to the result of occupational differences rather than direct pay discrimination. The research was based on the examination of the data from the Labour Force Survey from 1993 to 2008 and it suggests that by ensuring a more diverse workforce, recruiters could play a vital role in addressing the country’s ethnic pay gap.

For more details click here.

5.    Transition to localised pay is key
A report published by Policy Exchange, a conservative-minded research group, proposes that all public sector employers should adopt pay systems that reflect local labour markets. The document also lays out the details of what a local pay system might look like for the first time. According to the think tank the current system of national rates damages public services because of the difficulty of the public sector to find and keep the right staff in high cost areas. Anticipating criticism from trade unions, they added that national rates are unfair to public sector workers because their pay does not deliver the same living standards for the same job across the country.

To read the report click here.
For the article click here.

6.    Low job satisfaction levels in the UK
According to the British Social Attitudes Report, published for the 29th time this year by independent UK social research agency, NatCen, job satisfaction and work-life satisfaction are lower in the UK than in most European countries. The study shows that 22% of workers have taken a pay cut in the past three years, with men more likely to be affected by cuts than women. More than half of all employees surveyed say that their workplace experienced “a great deal of financial difficulty”.

For more details click here.

Pay Update- 17th August

Surveys

1.      Pay data
IDS have released pay settlement data for the second quarter of 2012. The private sector median stood at 3%, while the public and non-profit sector continued to struggle with a median settlement at 0%. The median for the whole economy was measured at 2.5%. Pay freezes are still very common: 1 in 5 pay settlements are pay freezes and they predominantly occur in the public sector.

For more details click here.

2.      Gap between pay and inflation tightening
According to data from XpertHR, the gap between pay awards and the retail price index (RPI) is at its narrowest levels for four years due to continued fall in RPI inflation. RPI has been falling for nine consecutive months to reach 2.8%, while the median pay award (according to XpertHR) stood at 2% during the last quarter.

For more details click here.

3.      Labour Market Outlook
According to the new Labour Market Outlook survey released by the Chartered Institute of Personnel and Development in August 2012, pay settlements have remained stable during the last year. The expected mean basic pay settlement among employers planning a review in the 12 months to May 2013 is 1.6%. Public sector organisations continue to predict pay awards of 0.2% that lag far behind those of private sector organisations (2.5%). This quarter has seen a sharp increase in the proportion of public sector organisations predicting that their average basic pay will increase in the 12 months to May 2013. The proportion of public sector organisations forecasting that pay will increase has increased from 16% to 26% during the past three months. It appears that there is more clarity around pay decisions in the public sector, with a much lower proportion of public sector organisations reporting that it is hard to tell or they don’t know what their average pay decision will be (13% in this quarter compared with 38% in spring 2012).

For more details click here.
For the survey click here.

4.       Employee Outlook
CIPD released another survey this month, which focuses on employee’s finances, the effect of pay cuts and on financial education. According to this survey, the Employee Outlook survey, the majority of organisations (73%) fail to provide financial advice or education to their workers. The failure to provide this help is detrimental, when we consider that 59% of respondents experience some degree of worry about their personal finances. The most common form of giving support, among the few that do, is employee assistance programmes.
The survey also talks about pay cuts, and not surprisingly demonstrates that it has affected the public sector the most. It shows that while only 13% of those working in the public sector enjoyed a pay rise since the start of 2012, 29% of private sector employees received a raise. As to job grades, senior managerial roles were the most likely to see their pay cut (15%) and less likely to get a pay rise (18%) than the workforce as a whole.

For article click here.
For the survey click here.

5.       Executive reward too high
According to a study by the Hay Group, The Trouble With Executive Pay, almost three quarters of non-executive directors think that executive reward is too high. This survey is the first to examine in detail the views of this stakeholder group and it shows that they tend to agree with the majority viewpoint that executive reward needs to change and that the connection between reward and performance is insufficient (87%).

For more details click here.

6.       Under 30s hit by pay cuts
Research from the Resolution Foundation presents a worrying situation for young people. It shows that earnings for people aged 16-29 years fell by 6.4% from 2003 to 2010, representing the biggest pay contraction across the UK workforce. Furthermore, if we factor in the difficult economic conditions of the last year, the decline for young people can be as much as 10% (between 2003 – 2011).

For more details click here.

7.       Temporary salaries rising
According to Office Angels, advertised temporary salaries have risen in June by an average 0.02%. All temporary roles saw an increase in salary on May figures throughout the country, which indicates that salaries are staying stable. The case of permanent salaries is more varied across regions and types of roles.

For more details click here.

Pay Update- 20th July

Government Plans & Measures

1.    Low Pay Commission
The Low Pay Commission has launched its 2013 consultation, looking for views on the national minimal wage and the level at which it should be set from October 2013. The government has also asked the commission to focus on youth unemployment, with special attention to apprenticeships.

For original article, click here.
For more info, click here.

2.    Pay report regulations
Following Vince Cable’s announcement of the government’s new rules on executive pay in June, draft regulations regarding reports on directors’ pay were published this month. With the new regulations reports will have to focus on making the link between pay and performance clear and announce a single figure for directors’ total pay for the year. The regulations also demand that shareholder engagement is sustained over the long term.

For original article, click here.

Surveys

1.    Pay data
Pay settlement figures for the three months to the end of May 2012 have been released by IDS. The median pay settlement for the private sector remains unchanged from last month’s figure at 3%. The median for the whole economy has slipped back from 2.8% to 2.5%, mostly due to the continuing high number of pay freezes in the public and voluntary sectors (still at 20%). Regarding the private sector, pay in manufacturing is still higher than pay in the private services. The median in manufacturing remained the same at 3%, while the median settlement for private services has increased from last month’s 2.5% to 2.6%.

For press release: click here .

2.    Graduate pay survey
According to the summer edition of the bi-annual survey by the Association of Graduate Recruiters, graduate starting salaries are rising higher than expected. While the winter survey pointed to a 4% expected increase (to £26,500), the current survey points to a 6% increase instead. Furthermore, the survey also highlighted that the number of applications per graduate vacancy is down to 73 from last year’s 83.

For original article, click here.

3.    Pay transparency link with employee relations
A new analysis of the CIPD/Benefax Reward Management survey shows that a link exists between employee relations climate and transparency. The survey shows that being more open about reward decisions can improve the quality of employee relations.

For original article, click here.

4.    HR salaries on the rise in London
According to the Robert Walters 2012 salary survey permanent HR salary levels are on the rise in London and in the South East. HR salary levels in London grew 2.6% in 2011, while only 0.3% in Birmingham and 0% in Manchester.

For original article, click here.

5.    Low expectations regarding pay increases
Finally, the 2012 Global Pay Optimism Index, presenting research from NorthgateArinso, deserves a mention as well. It presents pay outlook across several countries, including the UK. The survey found the lowest expectations for wage increases in the Eurozone, while UK employees are even less optimistic with 70% not anticipating an above inflation rise.

For original article, click here.

Pay Update- 26th June

The most recent pay settlement figures have been released by IDS and by XpertHR. According to IDS the median pay award in the private sector in the three months to the end of April 2012 stood at 3%, while XpertHR reported it to be at 2.5%. Both reports show the public sector median to be a pay freeze. In the economy as a whole, IDS reports that the proportion of settlements resulting in pay freezes increased from the previous month’s 8% to 20%, and that two thirds of these were in the public and voluntary sector. This large number of public sector pay freezes has had a significant impact on the median pay settlement for the whole economy, which has fallen back to 2.8%.

Public sector cutbacks are also having a significant impact on recruitment, according to the CIPD and Hays’ annual survey, Resourcing and Talent Planning. Of the 500 public sector organisations involved in the survey, 82% struggled to fill some positions over the last few months, up from 66% this time last year. More than 4 out of 10 employers attributed this shortage to pay freezes and perceived cuts in benefits resulting from pension reforms. 40% of public sector respondents also reported problems retaining management and professional staff. At the same time, however, the high level of unemployment may be seen in the fact that 71% of recruiters reported a rise in applications from unsuitable candidates.

Slightly more positive news for the economy comes from an Office Angels survey, which suggests that advertised salaries have shown signs of improvement in the second quarter of 2012. According to the survey, advertised salaries in April increased +0.2% compared to the previous year. Temporary roles on the other hand seem to have been barely affected by the fluctuating economy, with a year on year increase of +0.2 and growing by less than 0.1% month on month.

Meanwhile, the government has announced its new rules on executive pay, which are intended to give greater power to shareholders and to promote greater transparency. One of the new rules will be to introduce a three-yearly binding vote on pay by shareholders. This has led to accusations of watering-down, since the original proposal was for annual shareholder votes. The shadow business secretary has predicted that companies will find ways to get round the new rules by adopting broad and ill-defined policies. Another new rule will require firms to provide details of how company performance compares with the amount their executives are paid.

Despite the nationwide attention on executive pay, however, it would seem that remuneration for high level jobs continues to rise. According to IDS, financial directors of FTSE-100 companies saw total cash increases averaging 9.5% in the last financial year, with the median income reaching over £1 million. These increases have been driven by large bonuses rather than a rise in basic salaries.

The Government has also unveiled its response to its consultation on the introduction of compulsory pay audits for companies that have been found to have breached equal pay legislation by an employment tribunal. Micro-businesses would initially be exempt from these pay audits. Further consultations will follow later this year regarding how the audits will operate and what publication requirements will apply.

CIPD releases Labour Market Outlook

According to the new Labour Market Outlook survey released in May 2012 by the Chartered Institute of Personnel and Development (CIPD) pay prospects fail to show improvement.

Wage settlements are set to stay weak across all sectors. The expected basic pay settlement among those employers who are planning a pay review in the 12 months to March 2013 has fallen from 1.7% (reported in the winter 2011-2012) to 1.5% among LMO employers. This results from 0.3% pay settlement in the public sector, 2.2% in the private and 1.7% in the voluntary sectors.

The survey also discusses the key determinants of pay settlements and the most important reason is shown to be organisation’s ability to pay (60%), followed by inflation (52%) and productivity and performance (42%) also being key.