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The latest analysis of pay settlements from IDS (£) shows that the median pay award is 2.5 per cent in the three months to the end of March. While the median settlement is unchanged on the previous three-month figure, it is significant because RPI inflation has fallen to the same level, 2.5 per cent, in the year to March. If inflation on this measure falls further, and pay awards remain steady, or even show a rise, then settlements will be ahead of the all-items RPI for the first time since inflation went into negative territory in 2009. More

In his speech announcing the latest Comprehensive Spending Review, the Chancellor returned to the topic of progression pay in the public sector. He said: ‘Progression pay can at best be described as antiquated; at worst, it’s deeply unfair to other parts of the public sector who don’t get it and to the private sector who have to pay for it. So we will end automatic progression pay in the civil service by 2015-16. And we are working to remove automatic pay rises simply for time served in our schools, NHS, prisons and police. The armed forces will be excluded from [this]. Keeping pay awards down and ending automatic progression means that, for every pound we have to save in central administration, we can better limit job losses.’ More

So-called ‘merit’ or performance-related pay systems are coming under scrutiny, as line managers complain about shrinking budgets and ever-stricter guidelines for the distribution of pay rises. Line managers are also unhappy with the propensity for merit reviews to hijack discussions with staff about work objectives and how they might develop in their roles. Meanwhile employees point to the lack of transparency associated with merit pay, with outcomes that are often inequitable. More

Performance or merit-related pay has been a tool much loved by senior management at many companies since the late 1980s, but just as the recession has tested a whole number of cherished assumptions, so too has performance-related pay come under scrutiny. Tighter budgets have led to smaller pay pots, undermining the prospect of staff motivation that merit pay promises. And the principles involved have increasingly begun to be questioned by staff. In some instances, the lack of transparency surrounding the distribution of performance-related pay has resulted in arguments between employers and employees. More

The Office for National Statistics is to publish a new RPI-based measure of inflation, ‘RPIJ’, from this March. It will be published alongside the existing Retail Prices Index, the main measure of inflation used in pay-setting and uprating private pensions, Government bonds and gilts. This move follows a consultation over potential changes to RPI, regarded as necessary because of differences between the RPI and the Government’s preferred measure of inflation for macroeconomic purposes, the Consumer Prices Index (CPI). More

Recent coverage of the costs of public sector pay progression presents a partial picture. Official figures from the Office for National Statistics show that average earnings growth in the public sector is currently below that in the private sector. The latest figures, for the three months to June 2012, show that average earnings in the public sector (excluding financial services) rose by 1.5 per cent compared with the same period a year ago. The corresponding figure for the private sector is 1.8 per cent. This is the closest the two have been all year, with previous figures for 2012 showing an average gap of 0.5 per cent in favour of the private sector. More

TV reviews don’t often figure in our coverage, but Channel 4’s recent reality programme Show Me Your Money’ raised too many interesting issues for us to let it pass without comment. The show told the story of how Charlie Mullins, the owner of a successful London plumbing business, invited his 200 staff to disclose their salaries to each other. This is probably not that ground-breaking for many IDS Pay Report subscribers. But Charlie came up with the novel idea that any discrepancies could only be ironed out by better-off workers taking pay cuts in order to finance pay rises for those earning less. More

The Office for National Statistics has set out how it intends to meet concerns about the Government’s preferred measure of inflation, the Consumer Prices Index (CPI). Stephen Penneck, the Director General of the ONS, has said opens PDF]  that the body intends to be in a position to include owner-occupier housing costs in the CPI by early 2013. He also said that the ONS is working to understand and communicate the reasons for the difference between the CPI and the RPI, especially those caused by the formula effect of using different averages for calculating price changes. The ONS will report on this work throughout 2012. More

The latest sharp rise in the RPI, combined with a slight drop in the IDS median pay award, has once more cast a spotlight on the relationship between the cost of living and wages. The current high levels of inflation, coupled with comparatively lower average pay increases, mean that, in what economists and journalists like to call ‘real terms’, earnings continue to fall. More

A clear gap between the level of pay settlements in the public and private sectors is continuing, according to the latest data from IDSPay.co.uk. The median settlement level for private sector deals in the three months to the end of September is 2.6 per cent, up from 2.5 per cent in the three months to August. The median in the public sector remains at zero. More

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