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02 November 2012

Pay suffered a double-dip recession in the last pay round

Pay - just like the economy as a whole - suffered a double-dip recession in the 2011-12 pay round that ended in July, according to an analysis in Workplace Report from the pay experts, the Labour Research Department (LRD).

The general level of wage settlements has been lower, with pay freezes affecting not just the public sector but parts of the private sector too. And the workforce was, once again, split between the 'haves' with a pay rise of some kind and the 'have-nots'.

In the 2011-12 pay round, the midpoint or median rise on the lowest basic rate was 2.5%. That marks a small fall on 2.75% figure for the previous pay round. But as Graph1 shows there has been a double-dip in the settlements trend.

And behind the median figure of 2.5% the workforce was divided with around one in seven deals for a 3% rise, but a further one in six settlements involving a pay freeze.

The latest official figures show that the UK economy is out of recession, but in the new pay round, LRD's Payline database shows median rises of 2.7% and 2.6% for August and September respectively - barely above the trend in the 2011-12 pay round.

The only consolation is that the gap between inflation and LRD's Payline figures finally closed over the summer, after a period in which the cost of living rose much faster than pay. But that will be little comfort to those in the public and private sectors still being told that their wages are to be held down for another year.

Lewis Emery, pay researcher at the Labour Research Department, said: "Union negotiators who have adapted for recession and austerity may find they need to deploy the same approach once again in 2012-13 pay round."

"They will be hoping that in the new pay round inflation will continue to fall, while average pay rises at least maintain their present level. This would help workers make up some of the loss of earnings they suffered through the double-dip recession."

Notes for editors


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