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24 June 2009

Wage freezes and pay cuts show no sign of let-up in recession

Newly-agreed pay deals continue to bear the brunt of the recession compared to long-term settlements, with around 40% resulting in wage freezes or even pay cuts, according to data from the Labour Research Department (LRD) Payline database.

Pay freezes make up 23% of all pay deals for the three-month period from March to May. But when these figures are divided into long-term deals and new deals, it is clear that the majority of freezes and cuts are being applied to newly-negotiated pay settlements. Pay median levels overall are down on last year's figures, but remain close to inflation levels at 2.4%. (For comparison with previous months see tables below.) This figure is being propped up by the stability of a large number of long-term deals continuing to deliver above-inflation pay rises.

Within new deals there is also a divide, between the majority, where unions continue to be able to negotiate a positive settlement, and those - including some industrial sectors such as local newspapers and the motor industry - where freezes have been applied across the board and redundancies and other cuts are also being experienced. Workers in these businesses are taking the full force of the downturn.

Three-monthly medians show that in the period from March to May, the median increase was 2.4%, based on 150 agreements of which 35 settlements were pay freezes (23%) and three were pay cuts.

But for new deals the picture looks much less rosy. Here, the three-month median to May was 1.5% based on 79 new annual settlements or the first stage in new long-term deals, of which 32 (40%) were freezes and two were cuts.

Lewis Emery, LRD's pay and conditions researcher, said: "Long-term deals are clearly supporting the overall level of pay rises, while two-fifths of new deals are either freezes or cuts. Union negotiators who do not have pre-agreed pay arrangements are struggling to win good deals."

He added: "Particularly for those workers in the sectors most affected, there seems no let up in the recession yet as far as pay is concerned."

Table of three-monthly pay medians, showing all deals and new deals only. Figures from December 2008 to May 2009.

Pay settlements
(LRD Payline)
Three-monthly medians
(All Deals)
Three Monthly Medians
(New Deals)
Oct-December 3.9% 3.8%
Nov-January 3.5% 3.0%
Dec-February 3.2% 2.5%
Jan-March 3.0% 2.5%
Feb-April 2.5% 1.5%
March-May 2.4%1.5%

Table of monthly pay medians, showing all deals and new deals only.
Figures from December 2008 to May 2009.

Pay settlements
(LRD Payline)
Monthly medians
(All Deals)
Monthly Medians
(New Deals)
Dec 08 4.15% 4.15%
Jan 09 3.1% 2.5%
Feb 09 3.0% 2.5%
Mar 09 2.5% 2.0%
Apr 09 2.0% 1.0%
May 09 3.0% 2.1%
Notes for Editors

  • Payline is LRD's database of negotiated agreements reported to LRD by unions. It includes around 2,300 agreements with information on pay, terms and conditions and other aspects of the employment contract.
  • Community, FBU, GMB, PCS, RMT, TSSA, UCU, UNISON and UNITE union members have access to this database as do BFAWU and NUJ officials and the TUC. For more information contact pay@lrd.org.uk
  • Pay settlements are negotiated rises on basic pay, and exclude bonus, increment, overtime and other allowances.
  • Labour Research Department is an independent organisation founded in 1912 to produce research on behalf of trade unions and the labour movement. More than 1,800 trade union organisations, including 55 national unions, are affiliated to it, representing more than 99% of TUC membership.


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