The latest figures from pay analysts Industrial Relations Services (IRS) show that pay awards are back at 3% for both public and private sector workers, however, exactly half of all pay deals are worth less then they were a year ago.

While most workers are receiving a cost of living increase with a 3% pay award matching the level of headline inflation many pay awards are falling below this. Pay awards, according to IRS are now more widely spread with half now falling within the range 2.5% and 3.5%

As some workers are dipping out on inflation-matched increases many are getting deals that are worth less then a year ago. Almost a third, 32% were paid a higher settlement while the remaining fifth, 18% received the same increase.

Public and private sector pay deals were evenly matched with the median pay award in both camps settling at 3% in the 12 months to July 2004. This was largely due to what the report terms as ‘more subdued’ pay settlements in the public sector.

In further news that the manufacturing sector is still in the doldrums the report findings show that manufacturing pay deals fell to 2.5%.

In a sign that employers have acknowledged impending National Minimum Wage (NMW) increases set for October, several businesses said they planned to conduct additional pay reviews this autumn to accommodate the rise. The NMW will increase by 7.8%, from £4.50 to £4.85 an hour on the adult rate, from 1 October 2004.

Sheila Attwood of IRS said: “As pay awards for the three months to the end of July have nudged back up to 3%, from 2.9% in June, it will be interesting to see how private sector pay responds to the increase in headline inflation expected in the second half of the year.

“Meanwhile, for public sector pay the picture is quite different. The single largest pay deal in the economy -covering 1.3 million local government employees – paid a below-trend 2.75% from 1 April 2004. If the rest of the public sector follows their lead, pay settlements here will be an enviable benchmark for private sector employers. However, bargaining in the sector has been slow to get off the ground this year, and it may be some time before we see a settlement picture emerging.”