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31 March 2011

Private sector pay deals show divide

Pay settlements are still lagging well behind inflation, according to monitoring by the Labour Research Department (LRD). This holds even in the private sector where a pay divide seems to be opening up between companies doing well and those still struggling to recover from the recession.

The mid-point rise for settlements recorded by LRD's Payline database rose on average by just 3.0% in the three months to February while RPI hit 5.5% and CPI was 4.4%. The mid-point increase among newly-negotiated deals, that is those excluding rises under existing long-term settlements, is even lower, at 2.5%.

These settlements were virtually all in the private sector where, although there were barely any pay freezes recorded in the three months to February, there were some significant deals below the 3% mid-point. In the construction industry, Thermal Insulation Contractors settled on only a 1.9% pay rise effective from 1 January while efforts to secure a pay rise going back to 2010 under the big Construction Industry Joint Council (CIJC) agreement had still not succeeded.

Firms with pay deals significantly above the 3% mid-point included a number of manufacturing companies. There were rises of 5% for production workers at Rolls Royce (Derby) and at British Bakeries (Mossend), the latter as a result of an existing RPI-plus pay deal. Ineos Manufacturing Scotland had a 4.8% rise on pay rates and shift allowances while pharmaceutical manufacturer Sanofi Aventis awarded its Dagenham staff and manual workers a 15-month pay deal worth 3.75% (individual awards for staff vary above and below that figure).

LRD pay and conditions expert Lewis Emery said: "With the squeeze on the public sector tightening, hopes rest on the private sector not only to deliver jobs but also growth in earnings and spending power. These early figures do not give great cause for optimism that those hopes will prove to be justified".

Notes to editors
  • For further information on the survey analysis please email Lewis Emery, LRD pay and conditions researcher at lemery@lrd.org.uk.

  • These settlement figures, along with other pay information, are published in March 2011 Workplace Report.

  • Payline is LRD's database of negotiated agreements reported to LRD by unions. It includes more than 2,300 agreements with information on pay, terms and conditions and other aspects of the employment contract.
 

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