Employee Benefits Live: Level of pay awards could rise in 2012 but pace will be slow

Levels of pay awards could rise in 2012 but the pace will be slow, said Ken Mulkearn, editor of the IDS Pay Report, in his session at Employee Benefits Live 2011.

Outlining the latest picture on basic pay awards, Mulkearn showed that 3% has been the single most popular pay rise in 2011, with 49% of organisations, such as BT, BSkyB and John Lewis, offering it as an average increase to all staff.

This figure is slightly up from between 2% and 2.5% in 2010. Mulkearn said: “This year’s pay-setting round took place against a backdrop of a tentative economic recovery.

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“The economic gloom gathering as we speak is bound to affect pay planning into 2012.”

Mulkearn also said that there have been a small number of pay awards keeping pace with inflation, but this is unique to certain sectors such as the motor industry.

“Inflation’s role is limited in a post-recession context but could be more important in 2012 if economic recovery gets back on track.”

A number of organisations are also taking a “cap and collar” approach to pay awards, which is a two-year set minimum or maximum pay increase to protect both employers and employees against inflation.

For instance, BT set a cap of 3% for 2011 and 2012, AstraZeneca put a long-term deal in place of an upfront 6.2% pay rise, and Nissan raised its pay award to 3.5% in the second year of its two-year pay deal.

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