–UK Private Sector Employers Expected 2011-12 Median Pay Deal 2.5%

LONDON (MNI) – Employers expect UK private sector pay growth to
pick-up through to August next year, with company performance the key
determinant of pay levels, according to a survey by XpertHR.

The survey shows the median private sector pay deal is expected to
rise to 2.5% in the September 2011 to end August 2012 period, up from
2.3% in January through August this year.

In the comparable survey last year, employers’ anticipated median
pay deal was 2%, below the 2.3% that materialised.

XpertHR Pay and Benefits editor Sheila Attwood said that although
unemployment has risen, employers remained concerned about holding on to
key staff.

“To keep the right people they are going to have to pay a bit
more,” Attwood said.

Finance and utilities are among the sectors anticipating the
highest pay deals.

While the median forecast for pay deals in transport and
communication is just 2%, it is up at 3% in the utilities sector and 4%
in finance.

XpertHR asked respondents to identify key determinants of pay
growth.

Company performance/ability to pay was the most common influence on
pay deals, with 93% of companies citing it, followed by inflation, with
79% of firms mentioning it.

The survey shows employers are still more likely to reference the
Retail Price Index rather than the Consumer Price Index in setting pay,
despite the latter being the target measure for the Bank of England.

Just under 80% of companies referred to RPI, while just under 55%
cited CPI. Less than 10% of companies directly link pay to inflation,
but it is nevertheless expected to add to upside pay pressures.

Some members of the Bank of England’s Monetary Policy Committee
have repeatedly warned that high inflation outturns could be passed on
into pay.

With CPI rising to 5.2% in September, any pass through is still
expected to be partial, and XpertHR note even 2.5% median pay growth
would be lower than pre-recession levels.

XpertHR was previously known as IRS.

–London newsroom: 0044-7862-7491 email: drobinson@marketnews.com

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