A post-election government of any stripe will find it difficult to sustain public sector pay freezes because both private sector wages and inflation rates are now picking up, a study has warned.
The report by the Labour Research Department (LRD), an independent research organisation that provides information to trade unions, found that a slight increase in the number of pay freezes among private sector companies in January had been followed by a drop.
Median wages for the three months to April were also beginning to rise slowly, the LRD said, which suggested that “the end of concessionary bargaining by unions may be in sight”.
It also indicated that the median pay increase for negotiated settlements was 2% across the board, with pay freezes accounting for 16% of all settlements – the first time the figure has dipped below 20% since August 2009. It stood at 30% in the three months to January 2010.
Moreover, about a quarter of private sector pay deals were now being agreed at 3% or more, the report indicated, while the public sector median was 2.3% – although pay freezes, particularly in local government, are expected to become more widespread after the election.
Lewis Emery, LRD’s pay and conditions researcher, said that, while the age of pay curbs was not over yet, there was likely to be more pressure on all employers to provide positive wage increases as pay medians began to grow.
“With the rise in inflation, and pressure from comparisons with the private sector, it may be hard for whichever party is in government after the election to keep the lid on public sector pay,” he added.
The organisation’s findings were backed up by similar research from Incomes Data Services. Based on 112 wage settlements covering 313,214 staff, the survey showed that median pay rises in the three months to March rose 1.9%, up from 1.8% in the three months to February. About 31% of the settlements studied involved pay freezes.
Early indications also suggested that the trend continued into April, even though the median pay award in the public sector was only 1% and the proportion of pay freezes here rose.
