Partner Article

Pay prospects looking up for 2012

Employers have signalled positive prospects for pay in 2012, according to research from the Chartered Institute of Personnel and Development.

Over 1,000 employers were surveyed, and the results suggest the last quarter has seen pay intentions reach their highest level since spring 2009.

Asked if they planned to increase, freeze or decrease pay in the 12 months to December 2012, employers indicated an expected mean basic pay settlement of 1.7%.

This is compared with 1.5% in the previous quarter and 1.3% at the same time last year.

In the private sector 35% of employers predict a pay rise, with manufacturing and production firms forecasting the highest rises, followed by those in the service sector.

The replacement of a pay freeze with a 1% pay cap in the public sector has seen the proportion of employers forecasting a pay increase in this sector jump from 12% to 30%.

Charles Cotton, CIPD rewards adviser, commented: “While the predicted increases in pay settlements reflects a cautious optimism among members in the private sector that the worst may now be over, uncertainty about how fast the economy will improve is acting to moderate pay forecasts and leading many employers to hedge their bets on the outcome of the final decision.”

The survey also revealed a level of uncertainty amongst employers, particularly in the private and voluntary sectors, where over half felt unable to predict the outcome of their pay decision.

Mr Cotton continued: “As we move further into the pay round and as organisations get a better idea of how well they and the economy are likely to perform, we should see fewer feeling unable to predict the outcome of their annual pay decisions. “

On average, 16% of all employers predict a pay freeze for the coming year, but this ranges from 9% in the private sector to 40% in the public sector.

Finally, Mr Cotton added: “Across all sectors, and whatever pay decisions are predicted, it’s vital that employers maintain an honest line of communication with employees in order to keep staff motivated and engaged; previous CIPD research has shown that employees are satisfied with their employer’s pay decision if their employer has taken the time to explain the rationale behind that decision.

“The same research also showed that even among those employers that do talk to employees about the basis of their pay rise, few took the opportunity to explain to staff what needed to happen in the next 12 months for staff to get another increase.”

This was posted in Bdaily's Members' News section by Tom Keighley .