Number of pay freezes falls

The number of pay freezes continued to fall but still made up almost a third of settlements in the first three months of the year, figures showed today.

Average wage rises increased by 0.1% to 1.9% from the three months to February, according to a study of more than 100 deals by pay analysts Incomes Data Services (IDS).

Around 31% of the settlements studied involved a pay freeze, down from 34% in the quarter to February, although for April the figure fell to one in four.

The number of zero pay rises increased in the public sector, according to the report.

Ken Mulkearn of IDS said: "We are seeing a slow recovery in private sector pay awards. In particular, the proportion of freezes is drifting downwards, in a reversal of trends witnessed at this time last year, when the number of zero awards was rising steadily.

"However, settlement levels are still lagging behind inflation which means that real-terms wage growth remains weak for most workers, and the picture is even worse in the public sector, where restraint has started to bite hard and, in contrast to the private sector, the proportion of freezes is rising."

TUC general secretary Brendan Barber said: "The improvement in pay settlements is a welcome sign but there is still some way to go before wages increases return to pre-recession levels.

"Below-inflation pay rises will eventually reduce demand and could put a brake on the recovery. A real increase in wages in both the public and private sector is in everyone's interest."

Another report today found that take-home pay increased by 0.9% in the year to April, compared with 1.5% the previous month.

Payment systems firm VocaLink said the figure was the lowest since its records began in 2004 and reflected continued uncertainty in the labour market.

Gains made by manufacturing workers in March were reversed in April, while service sector pay growth also fell.

Marion King, chief executive at VocaLink, said: "The drop in this month's index continues to show the long-term trend of depressed pay growth.

"The last 13 months have seen take-home pay fluctuate between a range much lower than the 4% pre-recession average. Firms are continuing to keep their labour costs contained as competitive pressures remain high and economic activity recovers only gradually.

"In addition, the uncertainty surrounding the impending General Election is likely to result in caution over major business decisions."