Private sector pay shows signs of recovery

Private sector pay appears to be stabilising, according to the latest analysis of pay settlements from

The Pay Prospects 2011 publication showed an increasing number of awards were made between 2% and 3% during the period of June to August this year, and fewer pay freezes.

These figures show an improvement from 2009, when the distribution of pay settlements showed a prominent number of pay freezes, and pay rises were in the 1.1% to 3% range.

However, in the public sector, the median pay settlement is zero.

A survey of reward specialists by the IDS revealed that most expect their pay award to be higher in 2011 than 2010, but with inflation forecast to be around 4% between January and April, this will provide upward pressure on pay.

Ken Mulkearn, editor of IDS Pay Report, said: “Our latest figures show that as the economy has slowly recovered, there has been a general ‘defrosting’ of pay and benefits across much of the private sector.

“Higher inflation has played a role too, though affordability still weighs heavily in the balance and has kept most awards below the retail prices index (RPI).

“However a key question will be whether this ‘unfreezing’ continues into 2011.

“Inflation is forecast to remain comparatively high, and if the economic recovery continues, pay awards in the private sector could be centred on 3 per cent, with pay freezes at a two-year low.”

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