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08 February 2010

Pay freezes increase despite rising inflation

Some workers will be going without a pay rise for the second year running in 2010, despite a rise in RPI (Retail Prices Index) inflation to 2.4% for the year to December 2009, as the rate of wage freezes accelerates.

Pay freezes are a bigger proportion of all deals now than at any time during the recession, based on data available so far for January. Freezes now account for around one third (33%) of all pay settlements, according to Labour Research Department's (LRD) Payline database of negotiated pay deals economy-wide for the three-month period November 2009 - January 2010. This figure rises to a half (51%), if deals negotiated this pay round only, rather than subsequent stages of long-term deals negotiated in previous years, are included. The pay deal mid-point (median) has dropped to 1.5% (0% if long-term settlements are excluded).

A number of companies are extending pay freezes originally put in place last year. Examples include Hanson Building Products, motor manufacturer Nissan, motor parts manufacturer Stadco Powys, and Bolton Evening News and Bury Times (Newsquest). Staff in these companies will go without a pay rise for the second year in a row.

With pay prospects still suppressed, union negotiators remain extremely cautious about the state of the economic recovery, according to a survey conducted by LRD in December 2009. More than half expressed a negative assessment of economic prospects, with most not expecting to see any noticeable upturn until the later part of 2010. A lack of orders, fewer long-term pay deals, pension deficits, a more aggressive approach to issues such as performance from employers and the continuing threat of pay freezes, job losses and cutbacks, particularly in the public sector, are informing their views.

Three-quarters (74%) of union reps from the public sector and around half (47%) from the private sector expect pay and conditions bargaining to be tougher in 2010 than in 2009 (overall around two-thirds of survey respondents), with another 27% overall expecting 2010 to be similar to 2009. Only 4% expect conditions to be easier.

"It is easy to see that pay will not be the sole or even the main bargaining priority in 2010, although it may be too soon to judge the effects of inflation," said Lewis Emery, LRD's pay and conditions researcher. "Maintaining jobs and business continuity is a greater concern, both in the private and public sectors, with almost three-quarters (72%) of respondents identifying it as a priority. But with inflation at 2.4% pay will not be neglected either."

Notes for Editors

  • For further information about Payline and pay trends contact: Lewis Emery
  • 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, NUJ, PCS, RMT, TSSA, UCU, UNISON and UNITE union members have access to this database as do BFAWU officials and the TUC. For more information contact pay@lrd.org.uk
  • 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.
  • Pay settlements are negotiated rises on basic pay, and exclude bonus, increments, overtime and other allowances.
  • For further information about Workplace Report contact the Editor Rebecca Johnson at rebecca@lrd.org.uk.


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