Pay Report - IDS - Thomson Reuters

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IDS Pay Report
1114
l
July 2013
Research and analysis on pay and benefits
PAY SETTLEMENTS FROM IDSPAY.CO.UK
The median award in manufacturing has risen slightly in the three months to May
2013, according to figures from IDSPay.co.uk. Meanwhile, pay awards across the
economy as a whole remain centred on 2.5%.
ANALYSIS
Inflation
RPI inflation is set to rise slightly and remain around 3% for the next 18 months, according
to the latest forecasts from City economists. We present the forecasts in detail, as well as
looking at how employers are reacting to the changes in inflation measurement.
Building blocks of reward: job evaluation
In the latest instalment of our ‘building blocks of reward’ series, we look at job
evaluation. We explain why, when and how employers might undertake job
evaluation, exploring some of the options available and the pitfalls to avoid.
Earnings distribution highlights gender pay difference
Although recent data from the Annual Survey of Hours and Earnings shows a small
drop in the gender pay gap, the distribution of male and female earnings across the
economy remains heavily skewed. We take a look behind the headline figures to show
the real picture of male and female earnings.
LATEST NEWS ON PAY AND CONDITIONS
zz RETAIL – Sainsbury’s, Mitchells & Butlers, Tesco, Greggs
zz ENGINEERING – BMW, Hitachi Automotive, Komatsu, Pirelli
IDS
zz COMMUNICATIONS – BT
zz CHEMICALS AND PHARMACEUTICALS –Innospec, Roche Diagnostics
zz FOOD AND DRINK – United Biscuits, Toyota, Carlsberg
ids.thomsonreuters.com
REUTERS/Mohamed al-Saya
NHS BOARDROOM PAY REPORT 2013
MAKE PAY DECISIONS THAT STACK UP
the nHS Boardroom pay report 2013 is an essential information resource, arming
you with the facts and comprehensive analysis.
THE REPORT:
• Draws on data from around 95% of all NHS trusts and primary care trusts
(PCTs) with available full-year accounts
• Includes analysis of nearly every trust with foundation status
• Covers England, Wales and Northern Ireland while providing guidance on
board remuneration in Scotland
• Analyses basic salary, taxable benefits and total remuneration for key
executives in post for the last full year
• Looks at the key positions including chief executive, finance director, medical
director, clinical director, facilities director, nursing director, operations
director and planning director
• Examines pay for former PCT directors now heading up PCT clusters during
the transition to clinical commissioning boards
• Analyses pay by named trust
For more inFormation or to place your order
VISIT: incomesdata.co.uk
CALL: 0845 600 9355
EMAIL: [email protected]
IDS Pay Report
ids.thomsonreuters.com
Issue 1114 – July 2013
IDS Pay Report provides
VIEWPOINT
news and analysis of the latest Could pay budgets be on the rise?
developments in pay & benefits.
NEWS REVIEW
We monitor settlements, report
BMW Swindon – fall in RPI helps secure pay deal
on changes to pay & conditions
Sainsbury’s – bonuses paid from record pot
at named organisations, and
Hitachi Automotive – service holiday improved alongside basic pay rise
analyse statistics on inflation,
Centrica Energy Upstream – gas production firm awards second-year rise
earnings and the labour market
Mitchells & Butlers – merit-based awards for retail management
to provide a key resource for
Birmingham Hippodrome – pay deal increases maternity and sick pay
decision makers.
Building & Allied Trades JIC – pay deal includes boost to lowest rate
Pirelli – inflation-matching deal sees service holiday increase
BT – staff vote to accept basic pay plus lump sum deal
National Audit Office – pay rises in line with public sector cap
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NEWS IN BRIEF
Komatsu UK, Kimberly-Clark, Amnesty International, Tesco, United Biscuits, Innospec,
Roche Diagnostics, Terex Materials, Royal Shakespeare Company
IDSPAY.CO.UK
Higher awards continue to be reached in manufacturing
6
Our latest analysis of pay settlements shows that the median for the whole economy is
unchanged at 2.5%, though there has been a slight uptick in the level of manufacturing
sector awards.
ANALYSIS
10
Using data from the Annual Survey of Hours and Earnings, we take a detailed look at the
pattern of earnings for men and women.
Companies’ use of inflation indices: the state of play
IDS Pay Report
ISSN: 0019-3461
Head of Pay and Research Services:
Ken Mulkearn
Editor: Ken Mulkearn
Assistant Editor: Lindsay Hutton
Researchers: Angela Bowring, Rupert Griffin,
Peter Harrison-Evans, Laura James,
Hayfa Mohdzaini, Jon Taylor, Lois Wiggins
To speak to one of our researchers
please call 0845 3037214
Email: [email protected]
Published by
Incomes Data Services Ltd
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London EC1Y 8LZ
Subscriptions: For enquiries and renewals,
call Customer Services on 0845 600 9355
or visit www.incomesdata.co.uk.
IDS
13
In the light of the introduction of two new inflation measures, we review current practice
regarding the use of inflation indices at UK firms.
Current trends in pay: the real world behind the statistics
15
As earnings growth stalls on the official Average Weekly Earnings measure, we discuss how
this can be reconciled with the fact that firms continue to award pay settlements.
17
In the latest article in our building blocks of reward series, we explain the job evaluation
process.
City forecasters expect inflation to ease slightly
20
We bring together the latest set of inflation forecasts from City economists.
PAY STRUCTURES
Toyota
Innospec
Molson Coors
Sherwin-Williams
Greggs
Carlsberg
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DATACHECK
Latest statistics on inflation and earnings growth
27
Viewpoint
Could pay budgets be on the rise?
Most employers’ total spend on pay is likely to have increased
by the end of 2013, according to new research by the CIPD.
The organisation’s annual ‘Reward Management’ survey found
that almost 53 per cent of employers predict that their total
budgets for pay will have increased by year-end. Just below
35 per cent think it will stay the same, while a relatively small
proportion (12 per cent) are forecasting reductions. The main
impetus behind increases in pay budgets are pay rises on the
one hand, and taking on more staff on the other. Dealing with
skills shortages also plays a role in some instances.
What is the significance of this? For anyone familiar with IDS
pay monitoring, in one sense it’s an obvious finding. Most
organisations have indeed been awarding pay rises – mostly
between 2 and 3 per cent – and the proportion of freezes
has fallen significantly. In other words, it’s not necessarily
news that most employees (at least those in medium to largesized private sector organisations) have been receiving pay
increases. But the important detail is that a little over half of
those predicting a rise in pay budgets are likely to employ
more staff. In addition, around a fifth see dealing with skills
shortages as an important influence on reward spending.
Both these findings are congruent with the modest
improvement in the economic outlook recently. And it will be
interesting to see how they affect outcomes in terms of pay and
conditions reviews, as well as the picture on employment. But
this is largely a private sector phenomenon. The public sector,
by contrast, finds itself forced to reduce headcount and cut
pay in real terms. In the table below, the category of ‘other’ is
negligible for those looking to increase pay spending. But for
those reducing their spend, it’s a factor in a fifth of cases. As
the CIPD comments, the Government’s requirement for HR
departments to cut pay budgets could be the main issue here.
As is often the case with tick-box surveys, there are some
perplexing findings too. The main one here is that while the
bulk of firms operate either fixed pay, or a 90/10 split between
fixed and variable pay, the proportions fall when firms are
asked about their ideal approach. Employers are more likely
to report an 80/20 or even a 70/30 split as the ideal (though
very few would like to see a greater proportion than this being
made variable).
Paradoxically, this comes at the same time as the incidence
of variable pay, or at least the type based on an assessment
of some sort of performance, seems to be falling. The
survey found that all sectors, sizes and ownership types
of organisation (with the exception of manufacturing and
production) have seen a reduction in the use of performancerelated reward schemes.
So what’s going on? On the one hand, there remains a vogue
for making an element of pay variable, and some reward
managers would clearly like to increase the amount of salary
that is ‘at risk’. But the weak economy is undermining the
ability of merit pay schemes to deliver the promises they
make in respect of employee motivation. As one organisation
put it to the CIPD: ‘We have not been able to make a pay
award since 2009 and are intending to move away from a
performance-related pay system’. Clearly, a ‘performancerelated freeze’ was not on the agenda when this organisation’s
scheme was introduced, and such an outcome hopefully
bears little relation to the actual performance of most of its
employees. Hence the need for a rethink.
WEB
LINK
http://www.cipd.co.uk/hr-resources/survey-reports/rewardmanagement-2013.aspx
Influences on total pay spend in 2013 (% of respondents)
Drivers for increasing pay spend
Drivers for reducing pay spend
Pay rises
83.8
Pay cuts
29.6
Employing more staff
50.6
Employing fewer staff
81.5
Skills shortages
19.1
Skills shortages easing
1.9
Increases in average variable pay
15.3
Reductions in average variable pay
22.2
Other
4.7
Other
20.4
Source: CIPD
2
IDS Pay Report 1114 • July 2013
News review
For more news on pay visit ids.thomsonreuters.com
Fall in RPI helps secure pay deal at BMW Swindon
Some 780 employees working at BMW’s
Swindon manufacturing plant have recently
received a 3.2 per cent increase to basic
pay after lengthy negotiations. The pay
deal, negotiated with Unite, is backdated to
the annual review date of 1 January 2013.
According to the company, the fall in the Retail
Prices Index from 3.3 per cent in March to 2.9
per cent in April helped secure the agreement.
Employees are also eligible for bonus
payments through both company and
individual performance schemes. Under
the company bonus, the overall payment is
divided between plant-level and group-wide
performance, with employees receiving
£619 and £343 respectively this year. The
individual performance bonus remains
unchanged from last year, with employees
that ‘meet expectations’ eligible for a
payment of £200 and those that ‘exceed
performance’ receiving £500. Last year’s
pay review, effective from 1 January 2012,
increased basic pay by 4.2 per cent.
Auto-enrolment
The company has introduced a defined
contribution pension scheme in order to
comply with auto-enrolment. The firm’s final
salary scheme remains in place and is open
to new members.
Sainsbury’s pays out record bonus
Sainsbury’s has announced its highest
ever pot for bonus payments this year,
following a 6.2 per cent rise in underlying
profit before tax in the 2012/13 financial
year. More than 134,000 colleagues have
shared in a payout of over £90 million, with
payments for colleagues in store equivalent
to just over a week’s pay - an increase from
last year. The bonus scheme is based on
a variety of measures including profit and
sales at company level, targets around
stock availability and customer service at
individual stores.
The company has also awarded pay increases
averaging 2 per cent to retail and logistics
managers, as well as to colleagues and
managers in ‘central’ roles in store support
centres. The review covered 9,100 employees,
and was effective from 17 March 2013, with
individual rises based on performance and
position in relation to the market. The pay
review for retail staff is in September.
Hitachi Automotive raises pay and improves service holiday
Hitachi Automotive Systems has recently
finalised its annual pay review, awarding
merit-based increases which averaged 3.2 per
cent from 1 April 2013. The firm also made
improvements to service holidays, reducing
the time taken to qualify for extra days’ leave.
Previously employees received an additional
day’s holiday at five, 10, 15, 20 and 25 years’
service, taking holiday length from a basic
entitlement of 25 days to a maximum of 30
days. From 1 April 2013 the qualification
period has been reduced with an additional
day’s leave awarded at three, six, 10, 15 and
20 years’ service.
The company applied an increase worth 2.9
per cent to the minimum and maximum
rates across Hitachi’s grading structure. This
takes the minimum rate for a production
team member to £19,294 a year and for a
production engineer to £31,076. The firm
applied a different increase, of 3.2 per cent, to
the salary range for technicians who work a
three-shift pattern. This increase was a result
of improvements made to shift premiums
(which are consolidated into basic pay) for
three-shift working relative to two-shift
working.
Employees are also eligible for bonuses
paid in June, based on both individual and
company performance. This year bonus
payments were equivalent to four weeks’
pay. The agreement covers some 125 manual
workers and white-collar staff at Hitachi’s
UK manufacturing plant in Bolton. Last year,
employees received merit-linked increases
worth 2.5 per cent from 1 April 2012.
News in brief
Komatsu UK
Employees at hydraulic excavator
manufacturer, Komatsu UK, have
recently agreed an 18-month
staged pay deal. The first pay
increase under the agreement is
worth 3 per cent and is effective
from 1 September 2013, deferred
from the usual review date of 1
March. In the second stage of the
agreement, from 1 March 2014,
basic salaries will be increased
by a value equivalent to the RPI
figure for January 2014, subject
to a floor of 2 per cent and a
maximum increase of 3.5 per cent.
The deal, negotiated with Unite,
covers some 380 employees at the
company’s Birtley plant in County
Durham. Last year, employees
received a general increase of 3.9
per cent from 1 March 2012.
Kimberly-Clark
Basic pay and allowances have
been increased by 2.7 per cent
under a recently agreed deal
at the health and hygiene
product manufacturer KimberlyClark. The agreement covers
around 290 Unite-represented
blue-collar staff at the firm’s
manufacturing site in Barrowin-Furness, Cumbria and is
effective from 1 February 2013.
The agreement saw the basic pay
of a manufacturing technician
increased to £572.68 a week,
while the shift allowance
increased to £186.13 a week.
Kimberly-Clark makes products
under the Kleenex and Huggies
brands, among others.
Amnesty International
Amnesty International has agreed
a general pay increase worth
1 per cent with the union Unite,
effective from 1 April 2013. The
increase applies to 500 employees
at the international secretariat
based in London. Last year the
same employees agreed pay rises
of 2.5 per cent from 1 April 2012.
Amnesty works to protect human
rights worldwide.
3
News review
News in brief
Tesco
Tesco has awarded shares
bonuses worth 1.5 per cent of
salary, or £56 million in total, to
280,000 UK staff excluding senior
managers. The payment is down
on last year, following a difficult
trading year for the retailer,
with underlying profit before tax
falling by 14.5 per cent in the
2012/13 financial year.
United Biscuits
United Biscuits has awarded
increases to its white-collar staff
from a merit pot worth 3 per cent.
Some 2,000 white-collar staff
across the UK were covered by
the review which was effective
from 1 April 2013. In a separate
review, the company awarded
its manufacturing workers pay
increases from a pot worth 2.8
per cent, also with effect from
1 April 2013. Actual increases
for manufacturing staff vary
according to site. The deal,
negotiated with the GMB, Unite
and USDAW, covered about 5,000
manufacturing workers across
the UK. United Biscuits has seven
manufacturing sites in the UK,
and owns a number of brands
including McVitie’s, Jacob’s
and Penguin.
Innospec
Employees working at the
specialty chemical manufacturers
Innospec have received increases
to basic pay worth 3 per cent in
two separate agreements. The
agreements cover 98 employees
at the firm’s Ellesmere Port site
and 41 employees at its Widnes
site, and were effective from
1 January and 1 March 2013
respectively. The settlements
were negotiated with Unite. Both
groups were also eligible for an
annual bonus worth 4 per cent
of salary, based on company
performance. Last year these staff
groups received increases worth
3.5 per cent, effective from
1 January and 1 March 2012.
4
Centrica Energy Upstream awards second-year pay increase
Centrica Energy Upstream has awarded a pay
increase of 3.3 per cent in the second year of a
two-year deal, effective from 1 April 2013. The
increase, which was linked to January’s RPI
inflation figure, covers some 106 employees
that make up the collective bargaining
group for Centrica Energy Upstream in
the East Irish Sea region. This bargaining
group includes employees across three sites
including offshore, the Barrow Terminal and
Heysham, which all support the North and
South Morecambe gas fields. Employees were
also eligible for bonuses ranging between
5 and 10 per cent. Unite the union were
involved in the pay negotiations which paid
increases of 2.8 per cent in the first year of the
deal. Centrica is the owner of British Gas –
Britain’s biggest energy provider.
Mitchells & Butlers raises pay for retail managers
Retail management employees at pub and
restaurant group Mitchells & Butlers have
received average merit increases of 2.15 per
cent, effective from 1 April 2013. Individual
pay rises ranged between 0.19 per cent
and 13.33 per cent and covered 4,560 retail
management employees. In a separate
review, the firm’s 794 corporate employees
including senior management, white-collar
and administrative staff received average
merit pay rises of 2.52 per cent, effective
from 1 January 2013. Individual pay rises for
corporate employees ranged between 0.45
and 12.64 per cent.
Last year, the firm’s retail management and
corporate employees received merit pay
rises from pots worth 2.47 per cent and 2.52
per cent respectively. Pay rates for hourlypaid bar and restaurant staff are reviewed
in September. Mitchells & Butlers operates
a number of brands including All Bar One,
Harvester and O’Neill’s.
Birmingham Hippodrome improves maternity and sick pay
Around 370 employees at the Birmingham
Hippodrome have been awarded pay
increases worth 2.7 per cent under a recentlyagreed deal, effective from 1 April 2013. The
agreement, covering both permanent and
temporary employees and negotiated by
BECTU, also made changes to company sick
and maternity pay. Entitlement to company
sick pay will now start after three months’
service, reduced from six months. The
requirement to repay any enhanced company
maternity pay, in the event that an employee
does not return to work, has been scrapped
under the new agreement.
The latest deal builds on the 2012 agreement
which saw a return to constructive industrial
relations at the venue. Last year the
agreement resulted in pay increases worth
2.5 per cent and improvements to annual
leave and pension provision.
Building trade boosts lowest adult pay rate
Standard pay rates for operatives and
craftworkers covered by the Building
and Allied Trades Joint Industrial Council
(BATJIC) have increased from
17 June 2013. Pay rates for craftworkers,
young operatives and apprentices increased
by 2 per cent, while the adult general
operative rate increased by 3 per cent. The
agreement covers around 100,000 building
workers, and is negotiated between the
Federation of Master Builders (FMB) and
Unite. The agreement sees the standard rate
for an adult general operative increase from
£7.96 to £8.20 an hour, while the rate for an
advanced craftworker rises from £9.22 to
£9.40 an hour. The agreement also makes
improvements to the death benefit, which
rises from £23,000 to £25,000.
The agreement sees rates rise for the first
time since September 2011, when rates rose
by 1 per cent in a 9-month deal deferred
from June 2011. There was no increase in
2012, when the parties failed to agree.
News review
Pirelli improves service holiday in latest pay deal
Tyre manufacturer Pirelli has made
improvements to service holidays as part of a
one-year pay agreement, effective from
1 February 2013. Previously, employees
received an additional day’s leave at 25 years’
service. Under the latest deal, basic holiday
entitlement remains at 25 days, but now
employees will be entitled to 26 days’ leave
from 10 years’ service and 27 days after 25
years at the firm.
This year’s agreement increased pay by 3.1
per cent effective from 1 February, based
on the RPI inflation figure for December
2012. The pay deal, negotiated with Unite,
covers some 1,250 manual workers and
white-collar staff based at Pirelli’s two sites
in Carlisle, Cumbria and Burton-on-Trent.
Last year, employees received a pay increase
of 5 per cent in the second year of a twoyear deal, effective from 1 February 2012.
BT staff accept basic pay and lump sum offer
BT staff have accepted a 2.8 per cent increase
in basic pay and allowances, plus a one-off
pensionable lump sum worth £200, following
a recent CWU ballot which closed on 7 June.
The award was backdated to 1 April 2013
and covered some 60,000 staff in clerical,
engineering and operating grades.
The CWU hopes to extend the 2.8 per cent
pay award (although not the £200 lump sum)
to Manpower agency workers who are on BT
‘zero-hour’ contracts, subject to discussions
with Manpower. However, the pay rise is
unlikely to apply to Manpower employees
who are on ‘pay between assignments’
contracts, according to the union.
Merit-based performance matrix
In a separate deal negotiated between BT and
Prospect, managerial and professional staff
received performance-related increases worth
2.8 per cent on average. On-call and shift
allowances were also increased by 2.8 per cent
as part of the deal. The increases took effect
from 1 June 2013 and covered some 28,000
managerial and professional staff.
Individual increases ranged from zero to 9
per cent and were calculated using a meritbased performance matrix. This means pay
awards are linked to performance scores as
well as an individual’s salary compared to the
market rate for the job.
Taking the pay matrix for employees in the
lowest band, ‘Benefit Band 1’, as an example,
an individual whose pay is between the
lower quartile and median and who
achieves expected standards would receive
an increase between 2.9 and 4.2 per cent.
But an individual whose pay is between the
median and upper quartile and achieves
expected standards would receive a lower
increase of between 2.2 and 3.5 per cent
because the company judges their pay to be
above the market.
National Audit Office raises pay in line with public sector
The minimums and maximums of pay
ranges at the National Audit Office (NAO),
the public spending watchdog, have been
increased by 1 per cent, with effect from 1
April 2013. Around 700 employees received
individual increases, based on performance,
in a range from zero to 2 per cent.
The only roles at the NAO to be on incremental
pay scales are those covering about 200 trainees
in the assistant auditor and audit technician
trainee grades. These grades will continue to
receive annual progression increments, which
are estimated to be worth between 3.4 and
5.6 per cent. However, the trainee pay spines
have been frozen and remain at 2012/13 levels.
Under the latest review, the allowances awarded
to trainees on the successful completion of
exams have been increased by 5 per cent. Most
other allowances have been increased by 1 per
cent. The NAO estimates that the award will
add an overall 1 per cent increase to the total
paybill for staff in post.
The previous year’s award also resulted in
pay range minimums and maximums rising
by 1 per cent, effective from 1 April 2012.
Individual merit-based increases were worth
1.9 per cent on average, within a range
between zero and 2.9 per cent.
News in brief
Roche Diagnostics
Employees at Roche Diagnostics
have received individual increases
ranging from zero to 6 per cent,
with the award adding 2 per cent
to the paybill. The award applies
to some 550 employees based at
the specialist medical equipment
manufacturer in Burgess Hill, West
Sussex and was effective from
1 April 2013. Eligible employees
are also entitled to an annual
bonus based on performance. Last
year pay was increased by 2.3 per
cent on average, with effect from
1 April 2013.
Terex Materials
Manual workers and salaried staff
at Coalville-based Terex Material
Processing have received pay
increases effective from
1 April 2013. Some 40 manual
employees were awarded a pay
increase of 2.5 per cent, while
45 salaried employees saw their
basic pay increase by 3.2 per cent.
The pay increase for shopfloor
workers was negotiated with
the Unite trade union. Eligible
employees also received bonus
payments worth between 10 and
15 per cent based on grade and
individual performance. Last year,
the company increased pay by
3 per cent for salaried staff and
2.5 per cent for manual workers,
from 1 April 2012.
Royal Shakespeare Company
Employees working at the Royal
Shakespeare Company have
received increases to basic pay
worth 2.25 per cent, effective
from 1 April 2013. The agreement
covers around 1,000 technical,
production, front-of- house and
box office staff at the theatre
company and was negotiated
by BECTU, the trade union for
broadcasting, film, theatre and
allied workers. The deal was
accepted in a recent ballot of
BECTU members. Last year pay
was increased by 2.75 per cent,
with effect from 1 April 2012.
5
IDSPay.co.uk
Higher awards continue to be reached in manufacturing
The median pay award for the whole economy and across private services remains unchanged at 2.5 per cent.
There has been a slight uptick in the level of awards recorded at manufacturing firms where the median has risen
to 2.8 per cent
Distribution of pay settlements, Mar–May 2013
Pay settlement data – three months to end of May 2013
50
2.5%
2.3%
1.2%
1.9 to 3.0%
2.5%
2.8%
2.5%
1.0%
2.0%
Based on 132 settlements covering 1,699,235 employees
Source: IDSPay.co.uk
45
42%
40
% of pay settlements
Whole economy
Median
Average
Weighted average (by employee nos)
Interquartile range
Median by sector
Private sector
Manufacturing & production
Private services
Public sector
Not-for-profit sector
35
30%
30
25
20
15
10
16%
9%
3%
5
0
Pay freeze
0.1–1.99%
2.0–2.99%
3.0–3.99%
4.0%+
Source: IDSPay.co.uk
The median pay settlement in the three months to May
2013 stands at 2.5 per cent, where it has been for the last five
consecutive three-month rolling periods. The distribution of
pay settlements has changed little since the previous threemonth analysis to the end of April 2013, although there has
been a slight uptick in the proportion of pay increases at or
above 3 per cent. Awards at this level now make up a third of
awards (33 per cent), up from 31 per cent of awards last time.
The latest figures are based on 132 pay settlements, covering
almost 1.7 million employees.
a paybill increase of 2.8 per cent, effective from 1 June 2013.
Two separate awards at United Biscuits paid increases of 2.8
per cent to 5,000 manufacturing workers and average merit
increases of 3 per cent to some 2,000 white-collar staff. Both
pay deals were effective from 1 April 2013. BMW in Swindon
recently awarded its manufacturing staff an increase of 3.2 per
cent following protracted negotiations. The increase, which
is in line with other motor industry awards this year, will be
backdated to 1 January 2013.
Across the private sector, the median remains at 2.5 per cent,
which is also the mode, or the most common increase. There
is also a significant clustering of deals at 3 per cent. Higherlevel awards have been reached in the manufacturing and
production sector, and the median here has risen to 2.8 per
cent, up from 2.7 per cent in the three months to April 2013.
Increases at and above 3 per cent have been recorded in the
utilities, and vehicles and components sectors.
Year-on-year comparison
Long-term deals
A fifth of pay settlements in the three months to the end of May
formed part of long-term deals. These awards are clustered
at the higher end of the settlement distribution and show a
median of 3 per cent. The majority of these rises were awarded
as subsequent stages of long-term deals, with only four the
result of newly-negotiated deals for 2013. Economic uncertainty
has played a role in keeping the proportions of long-term deals
at lower levels than prior to the recession.
Key new deals
Recently-monitored awards include the pay deal for 28,000
managerial and professional staff at BT, which amounted to
6
The median settlement is at the same level it was at a year ago,
in the three months to May 2013. The number of pay freezes
has declined over the last 12 months, falling from 17 per cent
of awards in the three months to May 2012 to just 9 per cent of
awards in the latest period. Many of the freezes last year were in
the public sector, implemented as a result of the Government’s
pay policy. In the latest three-month period, the median award
in the public sector is 1 per cent, in line with the shift in policy.
Key new deals
Organisation
Asthma UK
British Gas
BT
Marshall Aerospace
National Audit Office
Northern Powergrid
Roche Diagnostics
Sainsbury’s
% increase
1.75
3.0
2.8 on paybill
2.5
1.0 on paybill
3.1
2.0 on paybill
2.0 ave increase
Effective date
Apr 13
Apr 13
Jun 13
Apr 13
Apr 13
Apr 13
Apr 13
Mar 13
IDSPay.co.uk
IDSPay.co.uk – tables and charts
IDSPay.co.uk records data on settlements across the economy, covering approximately nine million employees in total. We present the
data in two ways. The graph below shows the median and inter-quartile ranges of increases in each rolling three-month period over the
past 18 months, and the table below gives this data in numerical format, also showing the total number of settlements recorded in each
rolling three-month period. On the page opposite is our Pay settlement distribution chart, where each dot represents the settlement for
a particular organisation or bargaining group. The chart gives a clear idea of the overall distribution of increases and shows the outlying
settlements which are lost from view in the inter-quartile range chart. The totals shown below each month are the number of deals
effective in that month, rather than three-month rolling totals.
Methodology for analysing settlements
The percentage figure recorded for each settlement is the increase to basic pay. Bonuses or lump sum payments are not included in the aggregate
data, although information on the amount of such payments, where known, is shown in the table of latest settlements by named organisations
(see page 9). For settlements where the percentage increase varies for different employees (for example, based on individual performance) the
figure recorded is the average increase, where this is known, or alternatively, the increase received by most employees, or the paybill rise.
Percentage increase
Median pay settlement level
4.0
Definitions
3.5
The median is the level at
which half of the settlements
are above and half below.
The lower quartile is the
level at which a quarter
of settlements are below.
The upper quartile is the
level at which a quarter of
settlements are above.
3.0
2.5
2.0
1.5
1.0
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
2011 2012
2013
Settlements in the three months up to and including
upper quartile
median
lower quartile
Median settlement level for each rolling three-month period (whole economy)
Three-month 2011 2012
period to end Dec Jan Feb Mar Apr May Jun Jul
Lower quartile 2.0
2.5
2.4
2.5
2.0
2.0
2.0
2.0
Median
2.5
3.0
3.0
3.0
2.5
2.5
2.5
2.5
Upper quartile 3.0
3.5
3.5
3.5
3.0
3.0
3.0
3.0
Total*
85
196 201 222 300 299 302 81
*Total number of settlements recorded in three-month period. r=revised
Aug
1.0
2.0
3.0
93
Sep
1.0
2.0
3.0
87
Oct
1.0
2.0
2.7
94
Nov
1.3
2.0
3.0
75
Dec
1.2
2.0
2.8
57
2013
Jan
2.0
2.5
3.0
132
Feb
2.0
2.5
3.0
134
Mar
2.0
2.5
3.0
142
Apr
2.0r
2.5
3.0
140
May
1.9
2.5
3.0
132
Contribute to IDSPay.co.uk
The summary figures we produce each month are based on the settlements we receive from contacting organisations and them sharing
with us details of their annual pay review. As a subscriber to IDS Pay Report you may have spoken to a member of our team over the past
few months to give us details of the latest pay award for employees at your organisation. The more pay reviews we can collect over the
year, the more robust our median figures will be and the more use they will be to you as a subscriber. We would like you to take a moment
and email us the basic details of your latest annual pay review.
We require:
zz the name of your organisation
zz the basic percentage increase awarded
zz the effective date of the review
(and details if it is a long-term deal)
zz the type of employee and the number of employees
covered by the review
Example:
Name of organisation:
Basic % increase:
Effective date of review:
Employees:
Other details:
Trusty Bank Ltd
2.0
1 January 2013
500 clerical staff
ave merit (1st yr of 3-yr deal)
Please email: [email protected]
7
IDSPay.co.uk
Pay settlement distribution chart
Mar 2012 to May 2013
10
%
10
%
9
9
8
8
7
7
6
6
5
5
4
4
RPI
3
3
2
2
1
1
2012
Mar
26
Apr
258
May
15
Jun
29
Jul
37
Aug
27
Sep
23
Oct
44
Nov
8
2013
Jan
119
Dec
5
Feb
10
Interpreting the pay chart
Mar
13
Apr
117
May
2
Key:
The chart above illustrates the distribution of settlements in IDSPay.co.uk, with each dot
representing the settlement for a particular organisation or bargaining group. The month indicates
the effective date of the increase. The figures below each month show the numbers of settlements
recorded that are effective in that month.
numbers of employees covered

The rate of inflation is represented as a continuous line, to enable a comparison between
settlement levels and inflation.
500 to a 5,000
over 5,000
Private sector settlements

n
–
The table below gives a numerical breakdown month-by-month of the data in the chart.
under 500
Public sector settlements
Industry settlements setting minimum rates
Increase in the retail prices index over the
previous 12 months
Distribution of increases by month
Increase (%)
2012
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2013
Jan
Feb
Mar
Apr
May
Freeze
2
33
–
5
3
4
5
10
–
1
10
–
1
11
–
0.1–1.99
–
25
1
3
6
15
2
7
–
1
8
1
1
20
–
2.0–2.99
12
87
9
12
14
3
10
20
1
3
60
8
9
45
1
3.0–3.99
8
93
4
8
14
4
5
6
4
–
38
1
2
37
1
4.0–4.99
3
17
1
–
–
1
1
1
3
–
3
–
–
2
–
5.0–5.99
–
3
–
1
–
–
–
–
–
–
–
–
–
2
–
6.0–6.99
1
–
–
–
–
–
–
–
–
–
–
–
–
–
7.0–7.99
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8.0+
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total deals
26
258
15
29
37
27
23
44
8
5
119
10
13
117
2
Note: the month indicates the effective date of the increase
8
IDSPay.co.uk
New settlements added to IDSPay.co.uk
Sector
Organisation
% inc Comments
Effective
date
Employees covered
Advice & campaigning
Asthma UK
1.75
1 Apr 13
Barnardo’s
0.65
awarded to the majority of employees. 1 Apr 13
Those on the lowest scale points (4 to 10)
received increases between 1.9 and 7.5%
6,500 employees
Lubrizol
3.0
budget. Individual merit rises ranged
between zero and 7.9%
1 Apr 13
68 unionised white-collar staff
Nynas
2.5
1 Apr 13
130 unionised employees
Reckitt Benckiser
2.0
1 Jan 13
200 manual staff (Nottingham)
Roche Diagnostics
2.0
on paybill. Individual increases ranged
between zero and 6%
1 Apr 13
550 employees (Burgess Hill)
Construction
Thermal Insulation
Contracting NJC
2.45
effective for 9 months. Deferred from
1 Jan 13
1 Apr 13
6,000 manual workers
Energy & water
British Gas
3.0
2nd year of 2-year deal
1 Apr 13
11,000 service & installation
engineers
Centrica Energy
3.3
2nd year of 2-year deal, increase linked 1 Apr 13
to Jan 13 RPI
106 in collectively-bargained
group (East Irish Sea)
Northern Powergrid
Holdings Company
3.1
4th year of 5-year deal, increase based
on average RPI Mar to Feb 13
1,400 industrial staff,
engineers, clerical staff &
managers
Chemicals,
pharmaceuticals & oil
Engineering
1 Apr 13
96 employees
BMW Group Plant Swindon 3.2
plus company bonus worth £962 based 1 Jan 13
on company and plant performance
780 non-management
employees
Hitachi Automotive
Systems Europe
3.2
average merit increase
1 Apr 13
125 employees
Komatsu UK
3.0
effective for 6 months. 1st stage of
2-stage deal, deferred from 1 March.
2nd stage from 1 Mar 14
1 Sep 13
380 employees
Marshall Aerospace
2.5
effective for 9 months
1 Apr 13
1,400 employees
Sharp Manufacturing
0
pay freeze
1 Apr 13
400 employees (Wrexham)
Bernard Matthews
0
pay freeze
1 Mar 13
2,100 employees
Tate & Lyle
2.5
paybill increase. Individual increases
ranged between 0.75% and 5%
depending on appraisal rating
1 Jan 13
250 non-represented group
United Biscuits
3.0
average merit increase
1 Apr 13
2,000 white-collar staff
United Biscuits
2.8
1 Apr 13
5,000 manufacturing workers
Birmingham Hippodrome 2.7
1 Apr 13
370 staff
Royal Shakespeare
Company
2.25
1 Apr 13
1,000 technical, production,
front-of-house & box office
staff
MTV
3.0
1 Jan 13
250 employees
James Cropper
2.6
1 Apr 13
500 employees
Kimberly-Clark
2.7
1 Feb 13
286 process & craft workers
(Barrow-in-Furness)
Public sector
1.0
on paybill. 1% rise on range mins and
maxes. Range of merit rises zero to 2%
1 Apr 13
700 staff
Retail
Sainsbury’s
2.0
average increase. Based on merit and
position in relation to the market
17 Mar 13 9,100 managers & store
support centre staff
Telecommunications
BT
2.8
on paybill
1 Jun 13
Food, drink & tobacco
Leisure
Media
Paper & packaging
28,000 managerial &
professional staff
9
Analysis
For more analysis and features visit ids.thomsonreuters.com
In January we reported on the Office for National Statistics’ headline findings from its Annual Survey
of Hours and Earnings (ASHE) for 2012. The survey showed that the difference between men’s and
women’s earnings narrowed, meaning that the gender pay gap closed slightly. In this article we
produce two earnings distribution charts to look at the pattern of earnings for men and women in
more detail.
The ONS Annual Survey of Hours and Earnings
is conducted in April each year and provides a
snapshot of earnings across the UK. The most
recent findings showed median gross weekly
earnings for full-time employees at £506 in April
2012. Median earnings for men in full-time
employment stood at £546 a week, up 1.4 per
cent from the previous year, where for women
the figure was £449 a week, a rise of 1.9 per
cent. The difference between men’s and women’s
earnings was 9.6 per cent – the first time the
gender pay gap had fallen below 10 per cent.
This headline gender pay gap figure was based on
median earnings – the ONS’ preferred measure.
However, a more representative figure, which
takes a fuller account of earnings differences
between men and women, is the average or
mean. Under the average measure for fulltime employees the gender pay gap was wider,
although it still narrowed on the year before,
going down to 14.9 per cent from 15.9 per cent.
The overall picture and the breakdown of earnings is
more clearly illustrated with our distribution charts
which detail average earnings in £10 intervals. The
charts not only highlight the differences between
the earnings of men and women, but also show
that the overall pattern of earnings has changed
very little since the previous ASHE findings,
with the shapes of the two distribution charts
broadly the same in 2012 as they were in 2011.
Distribution of full-time earnings
The earnings distribution charts show the gross
weekly earnings of full-time employees. The first
bar in each chart represents the distribution of
men and women across the whole economy with
full-time earnings up to and including £200 a
week. These show that only 0.3 per cent of men
had full-time earnings at this level, whereas the
proportion of women earning £200 or less was
1 per cent of all female full-time employees.
Female employees
The shape of the bar charts reflects the differences
between the earnings of men and women. The
highest peaks on the chart covering female
10
employees, each representing 2.5 per cent of women
working full-time, were at £330 and £350 a week
(£17,206 and £18,249 a year). From this peak the
bars steadily get lower and lower, covering fewer
and fewer female employees, the further we look
up the salary range. The highest concentration of
female workers earned between £250 and £430
a week, or £13,035 to £22,420 a year. This range
covered 41.2 per cent of women working full-time.
Male employees
In contrast, the chart covering men had peaks
at £390 a week and £460 a week (£20,336 and
£23,984 a year), each covering 1.9 per cent of
male workers. The highest concentration of
earnings was in the range from £310 to £540 a
week (£16,163 to £28,156 a year), with nearly
40 per cent of men earning within this salary
range. The distribution of earnings had a much
less pronounced peak than the chart showing
the female earnings with the distribution
tapering away less steeply as salaries increased.
At the top end of the distribution, the proportion
of men who earned between £1,000 and £2,000 a
week was 11.6 per cent, with 2.2 per cent earning
over £2,000 a week. Overall 13.8 per cent of men
earned more than £1,000 a week or £52,140 a
year. According to the ASHE figures only 3.5 per
cent of women earned more than £1,000 a week
and the proportion earning over £2,000 a week
was so small as to be statistically insignificant.
Lowest and highest-paid jobs
A look at the lowest and highest-paid occupations
shows waiting and bar staff, and kitchen and
catering staff as the lowest earners, with fulltime pay averaging £267 to £269 week. As the
table shows, women are over-represented in the
lowest-paying occupations, with the majority
of these jobs having a far higher proportion of
women in the workforce than men. The ONS puts
the jobs in ASHE into broad categories and the
occupation group for hairdressers and barbers
showed that 91 per cent of the jobs were held by
women. For nursery nurses and assistants the
proportion was even higher, at 97 per cent.
Analysis
Little change in distribution pattern
In the top-earning occupations the opposite was
true. The highest-earning occupation was the
category covering chief executives and senior
officials, which gave an average full-time gross
salary of £1,982 a week, equivalent to an annual
salary of £103,340. Three-quarters of those
in this occupation band were men. In these
highest-paying occupations the only category
to contain a higher proportion of women than
men was legal professionals where women
made up 54 per cent of the workforce. Medical
practitioners were split between 59 per cent men
and 41 per cent women, but all aircraft pilots
and engineers in the ASHE sample were men.
Both distribution charts for male and female
employees are almost identical to the charts we
produced last year, with only very slight and
subtle differences, indicating that not much
has changed in the pattern of pay distribution
over the year. However, one slight difference in
the distribution pattern on the female chart is
a small increase in the proportion of women
earning over £830 a week (£43,276 a year) which
rose from 8.7 to 9.3 per cent, and this may be a
contributing factor to the narrowing of the gender
pay gap at the higher end of the distribution.
Lowest and highest-earning occupations
Lowest paying occupations
Average full-time
gross pay £pw
% of men (full and
part-time)
% of women (full
and part-time)
Waiters and waitresses
267
31
69
Bar staff
269
38
63
Kitchen and catering assistants
269
35
65
Leisure and theme park attendants
273
53
47
Launderers, dry cleaners and pressers
275
29
71
Hairdressers and barbers
277
9
91
Florists
282
*
*
Retail cashiers and checkout operators
287
31
69
Nursery nurses and assistants
302
3
97
Cleaners and domestics
303
27
73
Pharmacy and other dispensing assistants
306
10
90
Senior police officers
1,193
80
20
Functional managers and directors
1,241
64
36
IT and telecommunications directors
1,285
89
11
Air traffic controllers
1,289
57
43
Finance managers and directors
1,290
64
36
Legal professionals
1,303
46
54
Transport associate professionals
1,337
85
15
Medical practitioners
1,352
59
41
Marketing and sales directors
1,433
77
24
Aircraft pilots and engineers
1,555
100
0
Chief executives and senior officials
1,982
74
26
Highest paying occupations
*insufficient data in ASHE
Source: ONS Annual Survey of Hours and Earnings 2012
11
Analysis
Distribution of gross weekly earnings for full-time male employees, April 2012
2.5
Postal worker
£462
Call centre
agent £364
Retail
cashier
£345
Cleaner
£320
2.0
Proportion
earning
over £2,000
Engineering
technician
£654
Median
£546
Catering
assistant
£271
% of employees
1.5
Mean
£660
PA
£590
Secondary
school
teacher
£732
Bar staff
£278
Police officer
£809
Accountant
£814
1.0
IT project
manager
£998
0.5
Ov £98
0
er
£2
,0
00
20
50
£9
£9
60
90
£8
£8
00
30
£8
70
£8
£7
10
40
£7
£7
50
80
£6
£6
90
£6
20
60
£5
£5
00
30
£5
£5
40
70
£4
£4
80
10
£3
£4
20
50
£3
£3
60
90
£2
£2
00
Le
s
st
ha
n
£2
£2
30
0.0
Source: ASHE/IDS
Distribution of gross weekly earnings for full-time female employees, April 2012
3.0
Retail
cashier
£300
Call centre
agent £350
Cleaner
£286
2.5
Postal worker
£425
Catering
assistant
£267
Bar staff
£258
2.0
Median
£449
PA
£487
% of employees
Mean
£524
Secondary
school
teacher
£686
Accountant
£706
Police officer
£712
Engineering
technician
£569
1.5
Proportion
earning
over £2,000
1.0
IT project
manager
£851
0.5
00
,0
£2
80
Ov
er
£9
50
20
£9
£9
90
60
£8
£8
30
£8
00
70
£7
£8
40
10
£7
£7
80
50
£6
£6
20
£6
90
60
£5
£5
30
00
£5
£5
70
40
£4
£4
80
10
£3
£4
50
20
£3
£3
90
60
£2
£2
00
£2
£2
n
ha
st
Le
s
30
0.0
Source: ASHE/IDS
12
Analysis
Companies’ use of inflation indices: the state of play
Following an eventful first half of 2013 for the measurement of inflation, we review current practice
at UK firms, and look at how employers have responded to the changes. In this article we assess the
importance of inflation in the pay review process and the relative popularity of the different indices.
We also begin to gauge the extent to which the new measures, the RPIJ and CPIH, have been taken up
by HR professionals.
The use of inflation
Inflation continues to be a key reference point for
most employers prior to any pay review. In our
most recent survey of subscribers, 45 per cent
of respondents said that inflation and the cost
of living was either important or very important
when determining the level of pay increases, with
a further 45 per cent saying that it was moderately
important. Although affordability concerns may
have in some instances displaced inflation as
the key determinant during the downturn, most
employers continue to use inflation to some extent
as they decide on an annual pay increase.
The most obvious and direct way that employers use
inflation to determine pay increases is in multi-year
inflation-linked pay agreements. The graph above
shows the annual number of long-term deals recorded
by IDS since May 2008. Following a slight dip after
the recession in 2009, the number of long-term deals
has gradually crept back up (figures for 2012/13 are
likely to be revised significantly upwards as we gather
in more survey data in the latter half of 2013).
During this period there has been a slight decline
in the proportion of long-term deals with inflationlinked latter stages. However, in any one year there
are still generally between a third and a quarter of
multi-year agreements tied to the rate of inflation.
Where increases are not directly linked to inflation,
it can still be central to firm’s decisions on pay.
180
40
160
35
140
30
120
25
100
20
80
15
60
40
10
20
5
0
2008/09
2009/10
Total LTDs
2010/11
2011/12
2012/13*
% of LTDs linked to inflation
With all these changes underway, and following
our recent feature which set out the implications of
the new measures, this article looks to gauge how
employers currently use inflation indices. Using the
IDS pay database, we assess the continued significance
of inflation in pay setting and reveal some initial
responses of employers to the new measures.
Long-term and inflation-linked deals
Total number of LTDs
It appears that there is no letting up in 2013 for those
involved in the measurement of inflation, with the UK
Statistics Authority (UKSA) announcing two reviews
of price inflation statistics. This announcement follows
the introduction of two new measures of inflation
(the RPIJ and CPIH) and a switch in the status of
the retail prices index (RPI) earlier in the year.
0
Inflation-linked LTDs
*subject to revision
Source: IDS
For example, some firms that tend to review pay
every year will use a previous month’s inflation
figure as the benchmark for the annual award.
Furthermore, many firms go through a pay
review process where economic data is presented
to employees in negotiations held with either
trade unions or staff associations. Often, the rate
of inflation will be one of the central measures
in gauging the current state of the economy.
In some sectors, inflation plays less of a prominent
role in pay terms. In sectors such as retail other
reference points, particularly the National Minimum
Wage, will be more significant during the pay
review process. However, even here employers
will still need to be aware of changing inflation
rates to ensure that employees’ real earnings
do not fall significantly below rising prices.
The continued dominance of the RPI
It is worth noting that none of the current inflation
indices produced by the Office for National Statistics
are measures of the changing cost of living. They
are all measures of changing prices and hence
are at best only proxies for changing living costs.
The RPI is particularly dominant when it comes
to inflation-linked pay deals. In the year to April
2013, 91 per cent of inflation-linked pay rises
were based on the RPI. Taking a broader range
of employers into account, our last subscriber
survey found that where employers said they used
13
Analysis
inflation to help determine pay increases, 53 per
cent used RPI alone, with a further 16 per cent
using it in conjunction with other measures.
Although only used in a minority of cases, the CPI
does appear to be gaining increased prominence
in some firms’ decisions on pay. Some 30 per
cent of respondents to our subscriber survey said
they used the CPI as the sole inflation reference
point in 2012, compared to 20 per cent in 2011.
Responding to the changes
While there has been substantial change in the
way the ONS produces and presents inflation
in recent months, the extent to which this has
filtered through into the world of HR and reward
is unclear. To begin to gauge the initial responses
of HR professionals, IDS contacted a number of
firms to ask them about their current arrangements
and their awareness of the new indices. We
predominantly contacted firms within sectors where
inflation-linked pay deals are common, such as
manufacturing, utilities and transport. Therefore,
the following cannot be seen as representative
but does give an early indication of the approach
of some firms following the recent changes.
Awareness of the new measures
The majority of the firms we spoke to had heard of
the RPIJ and CPIH. However, levels of awareness
were mixed with a few firms unaware of the new
measures and others, although knowledgeable,
unlikely to make use of them in the future.
A few firms expressed interest in the new measures
as a potential route to resolving debates around
the CPI and RPI. These firms were considering
using the new measures for information purposes
among the HR team and in presentations to
employees. The aim for these firms was to diversify
the range of indicators used for informing
decisions on pay rather than to replace either of
the established measures. Crucially, no firm we
spoke to was, at this stage, seriously considering
linking pay to either of the new indices or making
either one the main indicator for inflation.
14
Sticking with the RPI?
While the take up of the new experimental RPIJ and
CPIH was understandably limited, firms did differ on
their future intentions regarding the use of inflation.
The main dividing line was between employers that,
despite the changes, argued that the RPI continued
to be their measure of preference and those that were
considering moving away from the all-items measure.
The majority of firms we spoke to were in the
former category and said they were unlikely to
move away from the RPI in the near future. Support
for the RPI was particularly strong in the motor
industry and in manufacturing more generally.
The principle reason given for keeping the RPI as
the main reference point for inflation was that its
use over many years meant that it was trusted by
the company and well-recognised by employees.
Another commonly referenced motivation was
that the extent of trade union support for the RPI
would make switching very difficult for firms
with collective bargaining arrangements.
Switching to the CPI?
A significant minority of firms did, however, say that
they were looking to move away from the RPI as the
sole economic indicator informing pay increases. A
few firms, particularly in the utilities sector, said that
they felt that the RPI had been too volatile in recent
years. As a result they were hoping to find alternatives
to long-term pay agreements which locked them into
making awards equivalent to the rate of RPI inflation.
The approaches of companies looking to move away
from RPI-linked pay deals were varied. A number of
companies simply wanted to diversify the number of
indicators used, keeping the RPI as the main index
but also introducing the CPI and potentially other
measures such as average earnings. Some firms said
that they were looking to conduct annual reviews
rather than enter multi-year agreements, while
others said that they may award different types of
increases, such as lump sums rather than across-theboard percentage increases. Others still said they
were considering introducing pay agreements linked
to other measures, particularly the CPI, although
none we spoke to had actually taken this step.
Analysis
Current trends in pay: the real world behind the statistics
The official earnings figures from the ONS are creating considerable confusion about what is happening
to pay. In the latest data, published on 15 May, total earnings growth in the private sector appeared
to hit zero, as measured by the official Average Weekly Earnings (AWE) series. Is this really the true
picture? Can this be reconciled in any way with the IDS measure of pay settlements in the three months
to March showing a median pay rise of 2.5 per cent?
The AWE was introduced as the recession began
and has not provided us with a particularly
clear guide to what is happening to pay. This
is because it is overly sensitive to changes in
the composition of the workforce, such as
increased part-time work or increased numbers
of lower paid employees, and to the influence
of large bonus movements, whether positive or
negative. It is more than a measure of earnings
as it reflects all sorts of labour market changes,
fluctuations in working hours and the changing
relationship between basic pay and bonus pay.
For example, when finance sector bonuses collapsed
between January and March 2009, the AWE for
the private sector went into negative territory.
As a result, many commentators drew the wrong
conclusion that pay throughout the private sector
had been frozen, when this was far from true.
Increase in part-time work
Part-time work, often on shorter contracts than
employees want, has expanded greatly. This has
led to lower average earnings in the sectors which
make up the bulk of the low pay economy - in
wholesale, retail, hotels and restaurants. Earnings
in this part of the private sector rose by 0.8 per
cent in the year to March. Average earnings
growth in retail and hospitality has been below
pay settlement levels of 2 per cent recorded for
the sector because of this expansion of part-time
work which reduces the average amount paid.
A key factor in the downward pressure on
earnings in the March 2013 figures was that much
lower bonuses were paid than previously in the
finance and business services sector and also in
construction. Total AWE earnings in finance and
business services were at -1.3 per cent in the year to
March, while in construction the figure was -2.2 per
cent. This was predominantly caused by the lower
bonuses, although both sectors also saw smaller
contractions in regular pay over the same period.
Delay in bonus payments
There is now stronger evidence that many large
bonuses in the finance sector have been delayed
from March until April/May to take advantage
of the cut in the top rate of income tax, effective
from the beginning of April. Indeed, the ONS says
in its commentary: ‘Some businesses responding
to the monthly survey of wages and salaries have
reported that bonuses that would normally be
paid in March are expected to be paid later.’
The result of this delay in bonus payments
has depressed the March earnings figures but
will inflate the April/May earning figures for
the finance and business services sector. This
kind of shift in behaviour has contributed to
the complexity in interpreting trends.
Lower rates for new workers
One sector where earnings growth has been more
consistent is manufacturing. Here total earnings
growth in the year to March was 2.1 per cent,
while regular earnings growth (which excludes
the effects of bonuses) was 2.3 per cent. These
figures are more in line with IDS findings on pay
growth. However, one factor depressing earnings
growth in manufacturing is the tendency to put
new workers on lower pay rates than established
workers, which lowers the average amount paid.
Many commentators use the AWE earnings series
to make comparisons of the different rates of pay
growth in the private and public sectors. However,
since June 2012 this has been made more complex by
the re-classification of around 180,000 staff employed
in sixth form and FE colleges from the public to
the private sector. Because these staff are lower paid
than the average, the effect of the re-classification
was to raise the average of earnings in the public
sector by around 0.7 per cent and lower the average
in the private sector by around 0.2 per cent.
Effects of re-classification
The ONS reports that regular pay growth in March in
the private sector was 0.8 per cent in the private sector
and 1.4 per cent in the public sector. To get a better
interpretation of pay trends between the public and
private sector for the year to March we can estimate
the trends without the effects of the re-classification.
This would give private sector regular pay growth of
1 per cent as against 0.7 per cent for the public sector.
15
Analysis
A further factor influencing average earnings
growth in the public sector is that the jobs being
cut are largely those of lower-paid support and
administrative staff. Often these are outsourced
to the private sector or simply not replaced at all.
This reduction in the number of lower-paid staff
has the effect of raising the average pay of those
remaining in employment in the public sector.
From June 2013, the effects of the re-classification
of 180,000 college staff will begin to unwind and
a better picture of the private and public sector
earnings growth will emerge. In the meantime, the
next set of figures – for April 2013 – to be published
in June, are set to show a bounce back in finance and
business services as those delayed ‘tax-enhanced’
bonuses are paid out in the new tax year.
The Governor of the Bank of England is now quite
optimistic about economic recovery. What impact
will recovery have on the AWE measure of average
earnings? Although there may be an initial upturn
in redundancies as so-called ‘zombie’ firms are
finally put into administration, it is possible that
aspects of the recession such as greater part-time
working, shorter hours, lower productivity and
under use of skilled employees could begin to be
reversed. This would produce an upward pressure
on the earnings figures with something of a bounceback effect, albeit a modest one in the short term.
Skilled construction workers could come back into
employment and earn higher pay and bonuses.
Productivity bonuses and overtime could go higher in
manufacturing. There might be an expansion in the
numbers of skilled workers required for new projects
and this could lead to a higher proportion of higher
paid employees. There might be a move from parttime to full-time work, especially among those million
or so workers who say they would prefer full-time
work. Profit-sharing bonuses could also go higher.
All these factors would tend to push the measure
of earnings higher than the measure of pay
settlements, reversing the way in which recession
and austerity have pushed the measure of earnings
down below the measure of pay settlements.
PAY IN IT AND
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16
Analysis
Mergers, technological changes and rapid growth are part and parcel of organisational life. But
significant changes often result in misaligned pay and benefits within an organisation. Job evaluation
can be used to help re-establish fairness and transparency in pay and benefits. In the eighth article of
this series, we discuss situations in which a job evaluation exercise would be useful and the practical
considerations of running such an exercise.
In our previous article in the ‘building blocks of
reward’ series, we discussed how organisations could
use salary surveys and pay clubs to determine the
market rate for a job. But should employers always
aim to pay at the market rate? How does pay compare
between jobs in the same organisation? Is pay fair
and equitable when compared to other jobs within
the organisation as well as in the wider market?
To complicate matters, other factors such as skills,
working conditions, organisation size and sector
may also influence pay. Pay setting could quickly
become arbitrary if employers do not justify decisions
in a consistent manner. One response to these
problems is to conduct a job evaluation exercise.
Why use job evaluation?
Job evaluation is often undertaken when there is a
significant change in the way work is organised, when
an organisation is going through a period of rapid
growth, or even as a ‘house-keeping’ exercise. For
example, there may be a need to harmonise or realign
two separate grading structures following a merger of
two organisations. Alternatively, the level of skill required
for jobs may have changed, for instance, following an
upgrade of plant machinery. Or job evaluation may be
used to make the grading structure more transparent to
employees. In the public sector, equal pay challenges have
led to job evaluation exercises as a means of ‘equalityproofing’ a pay and grading structure. Often, piecemeal changes made over time in response to various
factors can lead to the need for a wider re-assessment.
In terms of reward, the main reason for undertaking
a job evaluation exercise is to realign pay and benefits,
which could involve moving employees onto a
new grading structure. Following a job evaluation
exercise at Stannah Stairlifts, for example, hourly-paid
maintenance staff were moved to a salaried structure
based on experience and qualifications. Stannah
Stairlifts’ HR Director summed up some of the
reasons for change: ‘Moving them onto a salary was a
way for us to acknowledge the level of skill involved
in their roles and to increase their professionalism. It
also allows for more flexibility for them to carry out
maintenance tasks out of hours within the company.’
In addition, a job evaluation exercise can also uncover
employees in jobs that might be underpaid or overpaid.
Typically, employees who are underpaid would receive
a pay rise, while employees who are overpaid would
have their pay temporarily frozen or red circled. At
some organisations, employees may see their pay
reduced if their job weights have been significantly
reduced in the latest job evaluation exercise, albeit at
the risk of straining employee relations. For example,
plans to ‘down-band’ clerical staff and medical
secretaries at NHS hospitals in mid-Yorkshire have
triggered a lengthy dispute and industrial action.
Job evaluation does not have to be an exercise
exclusively for reward, but can also be used to
support other areas of the HR function. In employee
relations, a job evaluation exercise with a fair
appeals procedure could help prevent expensive
equal pay claims at an employment tribunal.
In terms of talent management, job evaluation can
be used to design a career progression framework
for identifying transferable skills across the
organisation. For example, a finance manager working
at an organisation’s head office could potentially
transfer to the finance department at one of the
organisation’s business divisions. Communicated
to all employees, it could make upward and lateral
career progression more transparent to everyone.
Job evaluation also has links with recruitment, and
learning and development. The job descriptions
gathered for an evaluation can be used for vacancy
advertisements and to identify any training
or coaching that job holders may need.
What is job evaluation?
Job evaluation is a systematic process for judging
the value or weight of a job relative to other jobs
within or outside an organisation. Job evaluation
can help establish or re-establish internal relativities,
transparency and fairness. But job evaluation will
not dictate how much someone should be paid.
The diagram overleaf shows the steps that are normally
involved during a job evaluation exercise. The first step
involves ‘funnelling’ or choosing a representative sample
of jobs for the evaluation exercise. Once these have been
selected, the next step is to gather facts about the jobs.
Typically, this would involve collecting job descriptions.
A questionnaire or interview with job holders and
17
Analysis
Steps involved in a job evaluation exercise
‘Funnel’ jobs
Fact finding
Evaluate
Evaluate jobs
jobs
‘Sore thumb’
discrepancies
line managers could also count as evidence, and
provide clarification on what individuals actually do.
The next step is to evaluate the jobs using an offthe-shelf, internally-designed or hybrid scheme
(see section below on schemes). As part of the
exercise, each job is assigned a weight, which will
enable jobs to be compared with each other.
The ‘sore-thumbing’ stage is when the job weights of
the various roles are compared and any discrepancies
ironed out. The planned changes, such as the
realignment of pay and benefits, are normally finalised
after the findings have been communicated and
appeals from employees have been resolved.
What scheme?
Job evaluation schemes are divided into
‘analytical’ schemes, which break down the core
components of a job for individual analysis, and
‘non-analytical’ ones that evaluate the job as
a whole. Analytical schemes are more widelyused, as they are held be less subjective, and
therefore less vulnerable to equal pay claims.
Many analytical schemes feature a component on
knowledge and skills, a component on the types of
communication expected, and another on the impact
the role has on the organisation’s goals and strategy.
Some core components usually carry a greater
weight than others. The weight of a job is the sum
of the scores for each core component of the job.
A good analytical scheme tends to assess each job on
five to eight core components that are common to all
jobs in the organisation. Selecting too few components
runs a risk overlooking the deliverables of a job,
while selecting too many risks double-counting.
Some schemes may be better suited for certain
sectors or jobs. For example, a scheme that places
greater weight on leadership but overlooks adverse
working conditions as a core component of a
job may not be suitable for evaluating roles in a
chemical plant. As hazardous working conditions
can be a common feature of working in a chemical
plant, many roles that are evaluated under such
a scheme could inadvertently be undervalued.
Cost is clearly another important consideration.
Organisations can minimise the costs by designing
their own scheme. But employers would need to
consider whether it would be as credible as other
18
Communicate
appeals
Resolve any
appeals
Finalise
changes
schemes available in the market and whether it could
be ‘equality-proofed’. Employers should ask a number
of questions. For example, are employees more likely
to trust the job evaluation results of an internal scheme
than one that has been tried and tested in other
organisations? Does the tried and tested scheme cover
all the key areas of work in the organisation? Do the
weights for each core component correspond to the
organisation’s values? If an existing scheme does not
fully meets the organisation’s needs and the thought
of designing a new scheme seems daunting, a hybrid
approach could be a middle-of-the-way solution.
Who should get involved?
Job evaluation should be done in teams, as a check
and balance mechanism for ensuring that the scores
fairly reflect the weight of each job. This means
that each role should be evaluated by at least two
people, to check that job weights are consistent. In
addition, each member of a panel should evaluate
more than one job to ensure that weights across
different roles, particularly across different grades,
are consistent. Most importantly, the job holder
should not evaluate their own job. Training on
the scheme could help assessors achieve a shared
understanding of how roles should be evaluated.
A job evaluator should be someone who is impartial,
methodical and can judge whether the evidence
gathered for a job truly reflects what the role entails.
Job descriptions borrowed from recruitment
advertisements, and designed to entice good
candidates, may overstate the responsibilities of a job.
The number and characteristics of members
that form a job evaluation panel depend on the
management style and timescale of the exercise.
Where the management style encourages employee
involvement, employee representatives and union
members may be invited to join the job evaluation
panel. Alternatively, the job evaluation panel may be
formed only of HR staff and line managers from other
departments. Some organisations may even limit the
panel to HR business partners in order to maintain
job evaluation purely as a management exercise.
We also know of organisations where all employees
have had the opportunity to train as job evaluators.
Sometimes, a job evaluation team could include
external consultants. External consultants could
help minimise the effects of internal politics on the
Analysis
Example job family matrix
Grade
HR
Finance
D
HR Manager, Learning Consultant 1,
Recruitment Manager, Reward Manager
Accountant 3, Business Assurance Analyst,
Financial Analyst, Payroll Manager 2
C
HR Advisor 2, Learning Advisor 2,
Recruitment Specialist 2, Reward Analyst 2
Accountant 2, Internal Auditor 2,
Billing Operations Manager
B
HR Advisor 1, Learning Advisor 1,
Recruitment Specialist 1, Reward Analyst 1
Accountant 1, Credit Collection Analyst,
Internal Auditor 1, Payroll Manager 1
results of a job evaluation exercise. But as consultants
may not be familiar with all of the jobs in the
organisation, a member of the management team
would need to help clarify any queries they may have.
assessment. This is to make sure that certain employee
groups are not adversely affected by the job evaluation
exercise because of, for example, their gender, age
or employment status, ie full-time or part-time.
Which jobs to evaluate?
Employees should also be given sufficient opportunity
to lodge an appeal. Where possible, the appeal should be
dealt with informally and the formal appeal procedure
should preferably be used only as a last resort. As an
example to avoid, IDS came across a case where a job
holder was performing beyond the requirements of the
job description, which could merit a slightly higher job
weight. While their line manager acknowledged the
job holder’s additional contributions, the line manager
explained that the organisation planned to recruit
another person to do some of the job holder’s additional
roles. The job holder felt de-motivated because they
had performed the additional responsibilities for some
time without being compensated for it. This situation
could have been avoided had the organisation acted
sooner. At the same time, it is important for employees
to be made aware that job evaluation should focus on
the job being undertaken, not on how the post-holder
performs the role or ‘goes the extra mile’ on occasions.
Despite its many uses, job evaluation is not without
its critics. Some have described the process as
inflexible, bureaucratic and time-consuming. To
avoid this, job evaluation panels need to carefully
balance the need to evaluate jobs accurately with
the need to pragmatically stick to deadlines.
In taking a pragmatic approach, organisations should
find ways to avoid evaluating every single job. For
example a call centre with 1,000 agents may only have
around a dozen distinct roles. Although the agents
may be handling different types of calls, it is possible to
distil the roles to entry-level call agent, senior call agent,
specialist call agent and so on. Sometimes a complex
organisational structure or, more often, internal politics
can get in the way of being pragmatic. For example,
it is not uncommon for managers to insist that their
particular area of expertise or own job is ‘unique’.
Where distinct jobs are less obvious, it may help to
look for a representative sample of jobs for evaluation
by grouping them according to grade, job family
or area of specialism. A headcount report or salary
distribution analysis may give clues as to which
jobs could be used for the job evaluation exercise.
A good job to evaluate would be one with a large
number of employees performing the same role. If
this is not possible, an alternative approach could be
to evaluate jobs on the lower quartile, median and
upper quartile pay of a grade. Or to evaluate a job
that is easily defined and can be benchmarked with
the market. Whatever the approach, there should be
a rationale behind the decisions taken, which should
also be clearly recorded. For smaller or more targeted
exercises, it may only be necessary to evaluate jobs
in areas where work has changed significantly.
How to manage expectations?
No matter how transparent the job evaluation process,
organisations should conduct an equality impact
The amount of information shared with affected
employees can help gain their acceptance of any
planned changes. Most organisations choose to
only indicate where an employee’s job broadly sits
in the new structure, but not the actual job weight
or job evaluation scores. Some organisations relay
this information in team briefings or one-toone meetings, while others rely on management
to sign off the results and ask line managers to
communicate the outcomes to employees in writing.
In short, the style of communication depends on
the organisation’s culture for sharing information.
Though whatever the organisation culture, it is
always important to keep employees informed.
IDS Research Services has successfully helped
numerous organisations in the public, private and
not-for-profit sectors with their job evaluation and
pay benchmarking projects. For more information
on how IDS Research Services can help your
organisation, please call us on 0845 077 2921.
19
Analysis
City forecasters expect inflation to ease slightly
The recent unexpected fall in the level of inflation has led to slightly lower predictions for the coming
year, according to the latest economic forecasts from City economists. However, the RPI is still expected
to rise in the short term and to remain at around 3 per cent for most of the next 18 months. Forecasters
also expect to see a modest recovery in economic growth, albeit slowly.
In the short term, the all-items Retail Prices Index
(RPI) is expected to rise to 3.5 per cent, according
to the latest forecasts from City economists,
collected at the beginning of June 2013. However,
RPI inflation is then expected to fall slightly and
remain at around 3 per cent until October 2014.
In the longer-term, RPI inflation is expected to fall
closer to, or just below, 3 per cent by the end of 2013
and the beginning of 2014. The forecasters see a
combination of a weak economy, stable commodity
prices and further small falls in the value of sterling
all keeping inflation at this level until October 2014.
Some forecasters expect the price of oil and, as a result
food, fuel and energy prices, to rise slightly in the
short term. But the main reason inflation is expected
to be higher in the coming months is that the fall in
fuel prices that took place over the same period in
2012 will drop out of the year-on-year comparison.
The Government’s preferred measure of inflation
for macroeconomic purposes, the Consumer Prices
Index (CPI), is also expected to rise above 3 per cent
in the short term. However over the longer term
CPI inflation is also expected to fall, but remain
above the target rate of 2 per cent until 2015.
The 0.4 per cent fall in the most recent inflation figures
released by the Office for National Statistics, for the
year to April 2013, took many forecasters by surprise.
The drop in the RPI was a result of unforeseen falls in
transport fuel costs. But as a result of this decline the
majority of economists that IDS has spoken to have
pegged back their expectations for inflation accordingly.
The majority of the City forecasters that IDS
has contacted expect economic recovery to gain
momentum. But any recovery will be subdued, and
while some forecasters have raised their predictions
for GDP growth, they have done so only by very
small margins. The continued recession in the
eurozone and below-inflation pay increases for
many employees continue to stifle demand.
All-items retail price inflation forecasts, 7 June 2013
Rounded
CB
CE
CG
GS
JPM
MS
NO
RBS
UBS
average
% inc % inc % inc % inc % inc % inc % inc % inc % inc % inc
May 2013
3.3
3.3
3.2
3.1
3.1
3.0
3.4
2.9
3.2
3.2
June
3.7
3.7
3.6
3.5
3.5
3.4
3.6
3.1
3.6
3.5
July
3.3
3.3
3.4
3.2
3.3
3.3
3.3
3.0
3.4
3.3
August
3.2
3.2
3.4
3.2
3.2
3.3
3.2
3.1
3.5
3.3
September
3.2
2.9
3.2
3.1
3.2
3.2
3.1
2.9
3.5
3.1
October
3.0
2.8
3.0
3.0
3.1
3.1
2.9
2.6
3.3
3.0
November
3.1
2.7
3.1
3.1
3.4
3.1
3.1
2.7
3.5
3.1
December
2.8
2.7
3.1
3.1
3.2
3.1
3.0
2.6
3.5
3.0
January 2014
2.8
2.8
3.0
3.2
3.4
3.2
2.9
2.6
3.7
3.1
February
2.5
2.6
2.8
3.1
3.1
3.1
2.7
2.6
3.4
2.9
March
2.5
2.4
2.6
3.0
3.1
3.0
2.7
2.4
3.3
2.8
April
2.8
2.6
2.8
3.3
3.1
3.3
3.1
2.5
3.6
3.0
May
2.8
2.5
2.9
3.4
3.2
3.3
3.1
2.5
3.8
3.0
June
2.7
2.5
2.8
3.5
3.4
3.3
3.3
2.6
3.8
3.1
July
2.7
2.5
2.8
3.5
3.4
3.3
3.2
2.5
3.7
3.1
August
2.6
2.5
2.8
3.4
3.4
3.2
3.3
2.5
3.7
3.0
September
2.6
2.5
2.8
3.3
3.4
3.3
3.4
2.6
3.6
3.0
October
2.7
2.5
2.8
3.3
3.3
3.1
3.2
2.6
3.5
3.0
Forecasters: CB Commerzbank; CE Capital Economics; CG Citigroup; GS Goldman Sachs; JPM J.P. Morgan; MS Morgan
Stanley; NO Nomura; RBS Royal Bank of Scotland; UBS UBS. Source: IDS
20
Pay structures
For more pay structures visit ids.thomsonreuters.com
This section provides details of changes to pay and conditions under the terms of the latest pay settlements in a selection
of companies, public sector organisations and industries. We detail current pay structures, with latest rates of pay for all
grades, and progression systems wherever they apply. Shift premiums and other relevant allowances or bonus payments
are also highlighted. The summary heading for each agreement provides details on the percentage level of the latest pay
rise, company or industry location, the categories of employee covered, numbers employed, and trade union involvement.
Toyota Manufacturing (UK)
Industry
Location
Employees
Nos of employees
Unions
Basic pay increase
Effective date
Car and engine manufacture
Burnaston (Derbyshire) and Deeside
Manufacturing, administrative, specialist and engineering staff
3,207
Unite
3.2% ave merit
1 April 2013
Summary
Employees have been awarded performance-based pay increases worth 3.2 per cent on
average, effective from 1 April 2013. Individual increases ranged from 0.95 to 3.6 per
cent for manual workers and from zero to 6.4 per cent for engineers and specialists. An
increase of 2.7 per cent has been applied to the salary band minimums for production
and maintenance workers, with smaller increases applied to band maximums in order
to prevent overlapping.
In 2012, basic pay was increased on average by 4.4 per cent, with individual awards
ranging from 2.1 to 4.8 per cent.
Pay structure at 1 April 2013
Job examples
Production team member
Maintenance team member
Min £pa
19,719
25,229
Max £pa
27,279
34,060
Salary progressionEmployees’ salary increases are usually appraisal-related. There are five categories of
performance rating, with awards ranging from the lowest (category 1) to the highest (category
5). For manual grades there are three ranks within each band and employees are eligible to
receive a promotion to the next rank depending on appraisal results and length of service.
A new pay matrix introduced for engineers and specialists (finance, HR and production
control staff) last July has become fully operational in this latest pay round. Under
the new matrix, the rank system has been replaced by a scheme linking appraisals to
the position of an individual employee in their pay band (low, middle or high), with
employees lower in the range receiving higher increases for a given appraisal score. This
year, the range of awards under the new matrix is from zero to 6.4 per cent.
Bonus schemeThe company bonus scheme, known as the ‘collective bonus’, is split into two major areas:
plant performance and financial result. The ‘plant performance’ element is currently based
on performance in three areas: quality, production efficiency and cost. The ‘financial result’ is
based on company profit and in-house cost performance. This year’s award, to be paid in July,
has not yet been confirmed, although according to the company it is likely to be around £500.
Shift premiums The majority of staff work a two-shift arrangement, with premiums paid for the following
shift patterns:
Shift premiums at 1 April 2013
Two-shift (alternating days and nights)
Three-shift (alternating mornings, afternoons and nights)
12-hour continuous shift
Premium %
17.5
24.6
43.0
21
Pay structures
Overtime premiumsOvertime premiums are paid for time worked on the following basis: Monday to Friday,
T+⅓; Saturday, T+½; and Sunday 2T.
Hours and holidaysBasic contractual working hours are 39 a week. Basic holiday entitlement is 25 days
a year, rising to 27 days after 10 years’ service. Last year, holiday entitlement for
employees with 20 years’ service was increased by one day, bringing the maximum
service holiday to 28 days.
Family friendly policiesMaternity entitlement is 18 weeks’ leave at 90 per cent of basic or average salary,
Previous IDS references
21 weeks at Statutory Maternity Pay, and the remaining 13 weeks unpaid. Paternity
entitlement is 10 days’ leave. Under the latest agreement the number of days paid at
base salary increased from two to three days, with the remaining seven days continuing
to be paid at the statutory level.
Pay Report 1110, p.15; 1099, p.19; 1097, p.3; 1072, pp. 4 & 20.
Innospec
Industry
Location
Employees
Nos of employees
Unions
Basic pay increase
Effective date
Specialty chemical manufacturer
Ellesmere Port
Industrial staff
98
Unite
3%
1 January 2013
Summary
Basic salaries for industrial staff were increased by 3 per cent with effect from 1 January 2013.
In the previous year, basic salaries increased by 3.5 per cent, with effect from 1 January 2012.
Pay structure at 1 January 2013
Job examples
Grade
Fitter, instrument mechanic, scaffolder/rigger,
general service operator
DL1 – day craft level
33,924
DL2
34,596
DL2A
35,631
DL3
37,248
DL3A
38,328
DL4 – team leader role
39,234
SL1 – shift level
42,123
SL2
42,972
SL2A
44,265
SL3
46,047
SL3A – team leader role
47,397
Process operators
£pa
Progression
The DL and SL grades are progressed through skills enhancement programmes.
22
Shift allowanceThe allowance for working continuous 12-hour shifts is £8,757 a year.
Hours and holidaysEmployees work a 37-hour week. All industrial staff are entitled to 25 days holiday
a year plus bank holidays.
Previous IDS referencesPay Report 1107, p.4; 1079, p.18.
Pay structures
Molson Coors
Industry
Location
Employees
Nos of employees
Unions
Basic pay increase
Effective date
Brewing
Burton-on-Trent
Clerical staff, operatives, laboratory technicians and engineers
550
Unite
1.5%
1 January 2013
SummaryPay rose by 1.5 per cent from 1 January 2013 for Unite-represented staff at Burton-on-Trent.
Last year pay was frozen from 1 January 2012.
Pay structure at 1 January 2013
Grade
A
B
C
D
E
TD
TE
Job examples
Junior administrator, clerical support
Administrator, secretary, temporary production operator with less than
12 weeks’ service
Maltings laboratory technician, temporary operator with more than
12 weeks’ service
Brewing operator, packaging operator, brewery laboratory technician,
stock control
Craftsman, senior laboratory technician, technical support
Technician, operator
Technician, engineer
£pa
15,560
20,680
23,050
28,823
31,606
30,575
34,526
Apprentice ratesApprentice operators and engineers receive the following percentages of the full rate:
Apprentice rates at 1 January 2013
No of years
1
2
3
4
% of full rate
40
50
60
70
Operators £pa
11,529
14,411
17,294
20,176
Engineers £pa
12,642
15,803
18,964
22,124
Shift workingEmployees who work alternating morning, afternoon and night shifts or a rostered pattern
with some basic hours over weekends are paid the following inconvenience allowances:
Inconvenience allowances at 1 January 2013
Inconvenience level
1
2
3
4
5
Maltings level 1
Maltings level 2
Maltings level 3
Example shift pattern
Days plus rostered weekends, two-shift
Two-shift plus weekends, three-shift
Three-shift plus weekends
Three-shift staggered
Four-shift continental
Two-shift
Two-shift continental
Eight-shift continental
£pa
1,405
3,443
4,279
5,170
6,913
1,405
4,279
5,613
Hours and holidaysEmployees are contracted to work 221 eight-hour shifts (1,770 base hours) a year, plus
nine eight-hour reserve shifts a year, giving an average working week of 39 hours. The
number of hours worked varies depending on production demands. Reserve hours may
be used in certain circumstances to allow for the completion of tasks which cannot be
23
Pay structures
performed or completed within base hours. Reserve shifts are paid as part of the basic
salary and no additional payments are made.
Basic holiday entitlement is 31 days plus three fixed bank holidays (Christmas Day,
Boxing Day and New Year’s Day). All other bank holidays are treated as normal
working days.
Previous IDS references
Pay Report 1051, p21; 996, p.3.
Sherwin-Williams Protective & Marine Coatings
(formerly Leighs Paints)
Industry
Location
Employees
Nos of employees
Unions
Basic pay increase
Effective date
Paint and coating manufacture
Bolton
Manual, white-collar and managerial staff
250
None
3% (on paybill)
1 March 2013
SummaryEmployees received individual merit-based increases within a range from zero to 7 per cent,
with effect from 1 March 2013. The review resulted in a 3 per cent increase to the paybill.
Last year all employees received a 2.5 per cent general increase to basic pay, effective
from 1 September 2012.
Pay structure at 1 March 2013 – production workers
Length of service
£pw
Temporary employee
285.70
Permanent employee
307.31
At 6 months’ service*
332.70
At 12 months’ service*
358.11
* subject to a satisfactory performance review
Shift payEmployees working a double-day shift pattern receive a premium worth 15 per cent of
their weekly earnings.
Overtime
Overtime hours worked on weekdays, and during the first four hours on a Saturday, are
paid at the rate of T+½. All other hours worked at weekends are paid at 2T.
Medical insurance benefitsAll employees are covered under the Bolton & District Hospital Saturday Scheme.
Bonus
Employees are eligible to receive a bonus based on profit-share, with the bonus paid out
on an equal share basis in December each year.
24
Hours and holidaysThe basic working week is 37½ hours. Basic annual holiday entitlement is 25 days,
rising by one day after each five years of service, up to a maximum of 30 days.
Previous IDS referencesPay Report 1089, p.24; 1068, p.4 & 22.
Pay structures
Greggs
Industry
Location
Employees
No of employees
Unions
Basic pay increase
Effective date
Retail and manufacturing
England, Scotland and Wales
Retail, bakery, office and management staff
15,644 retail staff, 3,191 bakery staff, 1,080 office and management staff
BFAWU, USDAW
2%
1 January 2013 (bakery, office and management staff); 1 April 2013 (retail staff)
Summary
Greggs has increased rates by 2 per cent for all staff groups, effective from 1 January for
bakery and office/management staff and from 1 April 2013 for retail staff and shop managers.
Last year rates were increased by 2.75 per cent for all groups from their respective
review dates.
Pay structure at 1 April 2013 – retail staff
£ph/a
Team member (under 18 start rate)
5.63
Team member (under 18 full rate)
5.81
Team member (adult start rate)
6.63
Team member (adult full rate)
6.83
Senior team member
7.27
Assistant shop manager
17,680 (+ commission)
Shop manager
20,475 (+ commission)
Pay structure at 1 January 2013 – bakery staff
Holidays
Bakery workers
£ph
Engineers
£ph
Age 16
5.353
Grade 6
8.103
Age 17
6.501
With proficiency
8.286
Grade 6
7.648
Grade 5
8.686
Grade 5
8.048
With proficiency
8.929
Grade 4
8.779
Grade 4
10.281
LGV driver
8.979
With proficiency
10.525
asic holiday entitlement starts at 21 days a year. This rises to 25 days after five years’
B
service, 26 days after ten years, 28 days after 15 years and to 30 days after 20 years’
service. In addition, all employees are entitled to eight days’ public holiday (nine days
in Scotland) and to an additional ‘floating day’.
Profit shareGreggs offers a half-yearly bonus to its employees in which 10 per cent of the profits
of the division they are working in is distributed. The amount received by individual
employees is based on a formula related to their service and salary level.
The company also operates a Save As You Earn scheme, which is currently open to all
employees with one year’s continuous service.
Previous IDS referencesPay Report 1111, p.5; 1093, p.21; ‘Pay and conditions in retail 2013’, p.80 & 81.
25
Pay structures
Carlsberg
Industry
Location
Employees
Nos of employees
Unions
Basic pay increase
Effective date
Brewing and distribution
UK
Drivers, drivers’ mates and warehouse operatives
744
Unite and GMB
2.3% (1st year of 2-year deal)
1 March 2013
Summary
asic rates for employees covered by the National Partnership Agreement (NPA)
B
have increased by 2.3 per cent from 1 March 2013, in the first year of a two-year deal.
NPA employees include drivers, drivers’ mates, and warehouse operatives. In the second year of the deal, basic pay will also increase by 2.3 per cent. Last year,
basic pay was increased by 3 per cent for NPA employees from 1 January 2012.
Pay structure at 1 March 2013
Job examples
Provincial £ph
London £ph
Warehouse operative
10.98
12.75
LGV driver
12.75
14.88
Bonus
All employees are eligible to receive an annual bonus if company profit targets are reached.
The value of individual bonuses is determined by company profit (50 per cent) and personal
objectives (50 per cent). The maximum potential bonus is 6 per cent and increases in line
with company profits. The profit target is set at the start of the year and personal objectives
are made up of both team and individual key performance indicators (KPIs), set by
individual depots.
Five key performance indicators are used. Depot KPIs may be linked to a variety of
factors, such as customer service, quality, health and safety, cost reduction targets and
individual absence. Managers are able to withhold individual bonuses if absence levels
are not acceptable.
Overtime
Overtime is paid at T+¼ for hours worked in excess of 42 and up to 48 hours and T+½
for hours worked over 48 hours from Monday to Saturday.
Shift premiumDrivers receive an additional premium of 25 per cent if their start time is before 6am.
Warehouse operatives receive a night premium of 25 per cent for hours worked between
10pm and 6am.
Hours and holidaysThe basic working week for employees under the National Partnership Agreement is
Depot managersManagers and senior managers are covered by separate pay setting arrangements.
42 hours. Annual holiday entitlement is 31 days plus three statutory days.
Current rates of pay are as follows:
Depot managers’ pay at 1 April 2013
26
Job examples
Minimum £pa
Typical/
midpoint £pa
Maximum £pa
Duty manager
26,730
29,700
32,670
Transport manager, warehouse manager
37,168
41,298
45,428
Previous IDS references Pay Report 1088, p.3; 1059, p.3; 1048, p.26; 1016, p.6; 1011, p.3; HR Study 911, p.18.
Datacheck
For more stats & facts visit ids.thomsonreuters.com
Inflation
Inflation measures (April 2013)
Retail Prices Index
All-items Retail Prices Index (RPI):
2.9 per cent
Consumer Prices Index (CPI):
2.4 per cent
CPIH (includes estimate of housing costs)
2.2 per cent
Next release dates: 18 June, 16 July
Inflation rates: RPI and CPI
6%
5
4
3
RPI
CPI
2
1
M J
2011
J
A S O N D J F M A M J
2012
J
A S O N D J F M A
2013
Source: ONS
Price inflation as measured by the Retail Prices Index (RPI) has
fallen back below 3 per cent for the first time since September
2012, according to new figures from the Office for National
Statistics (ONS). RPI growth dropped to 2.9 per cent in the year
to April 2013, down from 3.3 per cent in the year to March.
Inflation as measured by the CPI fell by the same amount, to 2.4
per cent in the year to April, down from 2.8 per cent the previous
month. The two experimental inflation measures currently being
collated by the ONS also showed falls of 0.4 percentage points
from the figures for March. Inflation under the RPIJ, which is
based on the same basket of goods as the RPI but calculated
using a different methodology, fell to 2.3 per cent in April. The
CPIH inflation figure, which is linked to the CPI but includes an
element of owner-occupied housing costs, fell to 2.2 per cent.
The month-on-month falls in inflation rates were largely the
result of falls in transport costs, particularly motor fuel and
(Jan 1987=100)
2011
May
June
July
August
September
October
November
December
2012
January
February
March
April
May
June
July
August
September
October
November
December
2013
January
February
March
April
All items index
235.2
235.2
234.7
236.1
237.9
238.0
238.5
239.4
238.0
239.9
240.8
242.5
242.4
241.8
242.1
243.0
244.2
245.6
245.6
246.8
245.8
247.6
248.7
249.5
inc %
5.2
5.0
5.0
5.2
5.6
5.4
5.2
4.8
3.9
3.7
3.6
3.5
3.1
2.8
3.2
2.9
2.6
3.2
3.0
3.1
3.3
3.2
3.3
2.9
Source: ONS
air fares. For example, the index for petrol and oil, which has
a significant weighting in the RPI basket of goods, showed a
3.7 per cent fall in the 12 months to April 2013. This led to
an overall inflation figure of just 0.6 per cent for the travel
and leisure element of the RPI, compared to annual growth
of 3 per cent or more for most other elements, particularly
seasonal food.
For the latest analysis of inflation data for the year to May 2013,
released on 18 June, please visit ids.thomsonreuters.com
All-items retail price inflation forecasts, 7 June 2013
Second quarter 2013
Third quarter 2013
Fourth quarter 2013
First quarter 2014
Second quarter 2014
Third quarter 2014
CB
% inc
3.3
3.3
3.0
2.6
2.8
2.7
CE
% inc
3.3
3.1
2.7
2.6
2.5
2.5
CG
% inc
3.2
3.3
3.1
2.8
2.9
2.8
GS
% inc
3.2
3.2
3.1
3.1
3.4
3.5
JPM
% inc
3.2
3.2
3.2
3.2
3.2
3.3
MS
% inc
3.1
3.3
3.1
3.1
3.3
3.3
NO
% inc
3.3
3.2
3.0
2.8
3.2
3.2
RBS
% inc
3.0
3.0
2.6
2.5
2.5
2.5
UBS
% inc
3.2
3.5
3.5
3.5
3.7
3.7
Rounded
average
% inc
3.2
3.2
3.0
2.9
3.1
3.1
Forecasters: CB Commerzbank; CE Capital Economics; CG Citigroup; GS Goldman Sachs; JPM J.P. Morgan; MS Morgan Stanley; NO Nomura; RBS Royal Bank of Scotland;
UBS UBS. Source: IDS
27
Datacheck
Average earnings
Average weekly earnings growth* (April 2013)
Whole economy:
1.3%
Finance and business
services:
0.9%
Private sector:
1.3%
Manufacturing:
2.8%
Public sector excluding
financial services:
1.3%
Wholesale, retail,
hotels and restaurants:
1.7%
*Total pay (including bonuses)
Next release dates: 17 July, 14 August
bonuses of £143 per employee in April 2013 were 107 per
cent higher than in March, and 64 per cent higher than in
April 2012.
Influenced by the bonus effect, total pay for the whole
economy grew by 1.3 per cent in the year to April, up from
0.6 per cent the previous month. In cash terms, total average
earnings were £484 a week in April 2013, up £18 from March’s
figure. Excluding bonuses, average earnings were just £3 a
week higher in April than in March.
In the public sector, excluding financial services, earnings
growth declined for the third consecutive month, with
annual pay growth falling to 1.3 per cent for the three
months to April. Furthermore, the reclassification of further
education colleges from the public to the private sector in
June 2012 means the real figures could actually be 0.6 to 0.8
per cent lower.
Average weekly earnings
£pw
490
485
Total pay growth was positive across the private sector, apart
from the construction industry, where both total and regular
pay contracted for the seventh consecutive month. The largest
increase was in the manufacturing sector, where total pay
reached 2.8 per cent, up from 2.1 per cent in the previous
three-month period.
480
475
470
465
460
455
450
445
440
Whole economy
Private sector
Public sector (excl. finance)
800
A large increase in April bonus payments has driven a small
recovery in average weekly earnings, according to new data
from the Office for National Statistics (ONS). Employers
appear to have moved bonus payments to April to take
advantage of the falling tax rate for high earners in 2013/14.
As a result, total pay including bonuses for the three months
to April 2013 grew by 1.3 per cent on the same period a year
earlier. Excluding bonuses, regular pay rose by just 0.9 per
cent over the year.
Across the whole economy, average weekly bonuses jumped
from £24 a week in March to £43 a week in April, a reversal of
the usual trend for the bonus season. The £43 a week bonus
figure is 49 per cent higher than in April 2012, and a number
of employers told the ONS that they had moved annual
bonuses from March to April this year. This suggests that
some firms deferred paying bonuses until the new 45p higher
rate of tax came into effect, to avoid paying tax at the previous
50p rate.
As is often the case, the bonus effect was strongest in
the finance and business services sector, where average
£
Finance & business services (£143)
M A M J J A S O N D J F M A M J J A S O ND J F M A
2013
2011
2012
Source: ONS
28
Average weekly earnings by sector at April 2013
700
Construction (£33)
Manufacturing (£29)
600
Public sector* (£2)
£544
500
Private sector (£53)
£532
£531
£474
£437
400
300
Wholesale,
retail,
hotels &
restaurants
(£26)
£290
200
100
0
Average weekly earnings £pw
Average weekly bonus (£pw)
*Excluding financial services
Source: ONS
Key statistics
For more stats & facts visit ids.thomsonreuters.com
Pay settlements
Reference data
IDSPay.co.uk
Reference period
3 months to end of May 2013
Median %
2.5
Interquartile range %
1.9 to 3.0
Reference period
Year to April 2013
Year to April 2013
Year to April 2013
Year to April 2013
Growth rate %
2.9
2.3
2.4
2.2
Index
249.5
233.2
125.9
123.8
Reference period
Year to April 2013
Year to April 2013
Growth rate %
1.3
0.9
£pw
484
447
Inflation
Reference data
Retail Prices Index (RPI)
Retail Prices Index Jevons (RPIJ)
Consumer Prices Index (CPI)
Consumer Prices Index Housing (CPIH)
Earnings growth
Reference data
Average weekly earnings, including bonuses *
Average weekly earnings, excluding bonuses *
* Seasonally adjusted series, annual growth in three-month average for whole economy
Labour market statistics
Reference data
Employment
Unemployment
Claimant count
Economic inactivity
Reference period
February to April 2013
May 2013
Rate %
71.5
7.8
4.5
22.4
Level
29,756,000
2,511,000
1,508,000
8,994,000
Did you know that lots of our news and pay and grading structures are now published online only? Go to the Pay & Reward section
of the IDS website for the latest content.
Barnardo’s
Nynas
Marshall Aerospace
AgustaWestland
Carlsberg
Tetley
Tetley
Building and Allied Trades JIC
Croda International
BAE Systems Maritime-Naval Ships Clyde
Scottish Government
Kimberly-Clark
Innospec
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All change in inflation statistics: the implications for pay setting
Merit or demerit: how might we reform performance pay?
Pay in IT and e-commerce 2013
Occupational focus: finance staff
Trends in pay and conditions 2013
Signs of recovery in trade union figures?
Pay in food, drink and tobacco 2012/13
Pay in Central Governent 2012/13
29
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