After months of pay stagnation at 3%, settlements have risen by an average 0.3%.

Pay analysts IRS, report that wage awards concluded between November last year and January 2005 have averaged at 3.3%.

This latest finding means that the IRS headline measure of pay awards has reached its highest level for more than six years, having last stood at 3.3% in December 1998. It also signals the end of the longest period of pay stability which lasted a total of 22 months.

Other key findings:

• Upper quartile stable: the point above which 25% of pay deals lie has remained unchanged at 3.5% for the three months to January 2005.




• Private sector pay awards jump to 3.3% for the quarter to January




• Public sector pay awards steady at 3% in the 12 months to January 2005




• Pay deals in the manufacturing and service sector rose to a median 3.2% in the quarter to January 2005.




• Pay deals higher than a year ago. More than six in 10 (62%) pay settlements were higher than in the same quarter last year. Just under a fifth (19%) paid the same increase in both years, while the remaining 19% of employee groups received a lower award.




• Merit deals higher than basic awards. In the quarter to January 2005, the median budget for pay rises based on performance stood at 3.5%, 0.2 percentage points above the basic pay deal figure of 3.3%.

IRS Pay and Benefits editor, Sheila Attwood said: “Although our settlement measure has risen to a six-year high, there seems little prospect of a sustained and decisive take-off in wage deals in the year ahead. The key, of course, is headline inflation – the main benchmark in the pay-setting process – that fell in the past month, dipping by 0.3 percentage points from 3.5% in December 2004 to 3.2% in January 2005.”