Pay freezes continue to fall

The proportion of pay freezes has continued to fall in the three months to the end of March 2010.†

Freezes accounted for 31% of settlements recorded in this period, according to the data from Income Data Services (IDS).

This is down from 34% of settlements in the three months to the end of February.The survey of 112 pay settlements covering 313,214 employees, conducted by, also showed the median pay settlement level has risen slightly to 1.9%, up from 1.8% in the three months to February.

The slight increase in the median may have been prompted by an increase in settlement levels in the private services sector, where the median increase increased from 1% in the three months to February 2010 to 1.3% in the three months to March.

The median settlement in the manufacturing sector remains above that of the private services sector, at 2%. This is in contrast to this time a year ago, when freezes were becoming increasingly common at manufacturing firms.

Looking at deals with effective dates in April, the proportion of pay freezes is down further, accounting for a quarter of the 60 pay settlements IDS has recorded so far. This compares with 36% of deals effective from January, which is the other main month for pay-setting.

Although the proportion of pay freezes is falling in the whole economy overall, the number of zero awards is rising in the public sector, with over half of the pay freezes effective in April affecting public sector workers. For example, 115,000 consultants, general practitioners and dental practitioners covered by the NHS Doctors and Dentists Review Body had their pay frozen for 12 months from 1 April 2010.

Ken Mulkearn, editor of IDS Pay Report, said: ‘We are seeing a slow recovery in private sector pay awards. In particular, the proportion of freezes is drifting downwards, in a reversal of trends witnessed at this time last year, when the number of zero awards was rising steadily.†

“However, settlement levels are still lagging behind inflation which means real-terms wage growth remains weak for most workers. And the picture is even worse in the public sector, where restraint has started to bite hard and, in contrast to the private sector, the proportion of freezes is rising.”

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