IDR monitoring of pay reviews in local government shows that while the median at opted-out councils is in line with the National Joint Council pay award, merit-based rises appear to be gaining popularity among employers outside the national deal.
Company cars are a popular employee benefit, although most schemes only benefit managers or those needing a vehicle to undertake their duties. In 2017, company-owned cars accounted for 8.9% of all registered cars.
Mileage allowances are so-called because they are not restricted to the reimbursement of fuel but take into account running costs such as wear, tear and insurance. As such, they tend to be higher than company car fuel rates. Continue reading Mileage allowances
The median pay award across the whole economy remains at 2.5% in the three months to the end of August 2018, according to the latest figures from IDR. The median remained steady in both the private and public sectors, at 2.5% and 2.0% respectively. Awards at firms in the manufacturing area produced an increased median of 2.8%, up by 0.4% since the three months to July with a similar sample size.
The median pay increase across the economy held steady at 2.5% in the three months to July 2018, according to the latest monitoring figures from IDR. It has not dipped below this figure since the three
months to November 2017. Continue reading Pay reviews – Median rise steady at 2.5%
Incomes Data Research (IDR) has become an official sponsor of Billericay Girls under 14 football team.
Commenting on the announcement, IDR Director Louisa Withers said:
“IDR is committed to making a tangible difference to society in the way we run our business and recognises that we have a responsibility to our clients, employees and contractors and the wider community in which we operate. When asked about sponsoring this exciting young team we felt it provided a perfect way of putting our principals into practice.”
“We feel it is important to encourage young people to take part in sport. Aside from the health benefits, sports help young people develop skills for later in life, such as confidence and the ability to work as part of a team.”
Our support secures funding for the team’s biggest priority – new kits for the 2018/2019 season. We wish all the players an enjoyable and hopefully successful season ahead.
We publish the results of our pay planning survey – which looks at employers’ reward intentions for 2019 – at a time when the economy and the labour market present a series of apparent paradoxes. On the one hand, economic growth is weak in comparison with previous periods, with the manufacturing sector virtually in recession and job losses in parts of retail. Productivity growth has faltered since the crash of 2009, and business investment remains low in historic terms.
On the other hand, the labour market seems to be robust, at least in terms of falling unemployment (down to 4%, a figure it last reached in the mid-1970s) and still growing employment. But there is a debate about the extent to which the labour market may have a soft underbelly. This is mostly framed in terms of how ‘underemployment’ – the extent to which employees would like to work more hours, while falling, is still some way above pre-recession levels, indicating that there are still areas of weakness in the labour market. Our survey results tend to support the view that the labour market is tighter, or at least tightening. Over three-fifths of respondents said that pay pressures are increasing, with recruitment and retention issues the main factor behind this. It could be that we have reached the point where it is no longer possible to reduce unemployment and raise employment without increasing wages further. The changing make-up of the labour market in the run-up to and in the aftermath of Brexit could also be a factor here. In addition, while inflation is not as high as it has been in previous periods, it remains at moderate levels and is expected to remain so over the next period, with the possibility that Brexit could see it rise further (see forecasts on page 5). It is not surprising, therefore, that the cost of living has become more important for employers when it comes to determining the level of pay rises. These pressures could produce higher pay rises in 2019 than in 2018. We asked respondents how they thought their 2019 pay awards would compare to inflation. Similar proportions – just below a third – thought they would be equal to the RPI and CPI/CPIH in each case, while just above a quarter thought that pay rises would be in-between the CPI/CPIH and RPI percentage rates. If economists’ predictions are correct and the RPI is around 3% in the first quarter of 2019, then we could see a third of awards at this level (with a further small proportion, 6%, above the RPI). A further third could be worth around 2.2%, while just above a quarter could be set at intermediate levels, eg around 2.6%. Overall this points to between three-fifths and two-thirds of pay awards in 2019 coming in at 2.6% or higher, with many of these at 3% or above. Meanwhile the NLW will also continue to present an upward pressure at the lower end of the earnings distribution.
Other issues for HR/reward professionals in the year ahead include the burgeoning agenda around the reporting of various pay statistics. Employers had to publish their gender pay gaps for the first time this year. The new rules made for an enhanced focus on equal pay issues, even if figures for gaps by job or grade were not required, and this is unlikely to diminish. In fact, the prospect of extra data requirements figured in the Conservatives’ 2016 manifesto and is therefore possible even if the current administration survives. Indeed, the Commons committee on the lessons learnt from the introduction of gender pay gap reporting makes a number of recommendations that point in this direction, including gaps at deciles rather than quartiles and measures to improve data accuracy.
Added to this (in 2020) will be the obligation to report the ratios between the salaries of chief executives’ and those for each firm’s ‘average’ worker. All of this means that properly communicating reward practices to employees will gain in importance over the coming period. Another emerging theme is the possibility that more employers could consider linking pay to productivity improvements. This can be done crudely in those instances where output can be easily measured, but in most cases the emphasis is likely to be on connections between salaries and some indicator of capability, competency or skills. These sorts of relationships could help improve the economy’s poor performance in respect of productivity.
It has to be said, though, that widespread developments in this area are unlikely without a rise in business investment. This tends to be positively related to wage growth. Indeed, the fact that business investment has faltered in the wake of the recession and in the advent of Britain’s departure from the EU is a key explanation for the relatively weak real-terms wage growth witnessed since the crash. For the economy to resume growth, investment will have to begin again, whatever the UK’s relationship with its nearest trading partners. If and when it does, wage growth is likely to be stronger.
Incomes Data Research has successfully passed Cyber Essentials, demonstrating our commitment to cyber security.
Cyber Essentials is a is a UK government scheme encouraging organisations to adopt good practice in information security. It helps firms guard against the most common cyber threats and ensures firms have robust IT and data security processes and systems in place.
Falls in bonus pay nudge earnings growth down to 2.4%
The rate of growth of average weekly earnings in the whole economy dropped back again in the latest figures from the ONS, to 2.4% in the year to June 2018, down from 2.5% in the year to May and 2.6% in the year to April. Bonus pay fell across all industrial sectors, especially in finance and business services, and was a major contribution to the drop in total pay growth.
Underlying earnings growth, as measured by the ‘regular pay’ series, which excludes bonuses, was a little higher at 2.7%. While this was also down on the previous month’s headline figure – which is based on a rolling three-month average – the single-month figures for regular pay for June showed a slight rise, from 2.7% to 2.8%, in contrast to the single-month figures for total pay, which fell sharply from 2.5% to 2.1%.
Average weekly earnings by sector at June 2018
|Average weekly earnings - regular pay (£pw)||Average weekly bonuses (£pw)
|Finance and business services||582||75|
|Wholesale, retail, hotels and restaurants||333||21|
In last month’s figures, the fall in bonuses was confined to the finance and business services sector. However, this month bonuses fell back across all sectors, reflecting weakness in the economy in the year to June.
In the finance and business services sector, total average earnings grew by 1.5% in the year to June, marginally up on the figure of 1.4% in the year to May. In this sector the rise in earnings growth excluding bonuses was 2.4%.
In manufacturing, average earnings grew by 2.5% in the year to June, down from 2.9% in the year to May. However, a year ago, in June 2017, the rate of growth in manufacturing was much lower, at 1.3%.
In construction, where pay growth has been higher than other sectors recently, the rate of growth in average earnings was 5.3%, down a little from a revised figure of 5.7% in the year to May. However, in June 2017, the rate of growth in earnings in construction was almost zero, at 0.1%.
In the lowest-paying sector of wholesale, retail, hotels and restaurants, which has seen significant job losses over recent months, earnings growth was 3.2% in the year to June, the same as the revised figure for May. In June 2017, the rate of growth was a percentage point lower at 2.2%.
Looking at the private sector overall, average earnings growth was 2.4% in the year to June on the total pay measure and 2.8% on the regular pay measure. Meanwhile in the public sector, pay growth was 2.2% in the year to June, the same as the revised figure for May (both on the total pay measure, since bonuses are not a significant component of public sector pay).
Despite the public sector employing a much greater proportion of graduates and professional staff than the private sector, average weekly earnings are currently lower in the former than in the latter. Actual average earnings in the public sector dropped back from £518 in May to £517 in June, slightly behind the private sector figure of £518. First-stage increases from the recent three-year pay deal in the NHS were only paid in July and as such have yet to appear in the ONS data.
A majority of UK firms (70%) improve on statutory maternity pay of £145.18pw, according to IDR’s survey of maternity and paternity provisions. The most generous occupational maternity pay policies are on offer within the manufacturing and primary sector. Among the 53% of employers in this sector that offer enhanced maternity pay, mothers are typically eligible for around 19 weeks’ full pay. The lowest-value enhanced maternity pay policies are found within private services, where they are worth around 12 weeks’ full pay.