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Government increase to minimum wage not impacting on long-term pay increases

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According to latest data from pay analysts at XpertHR, although eight out of ten private sector employers are planning a general pay increase for staff over the next year, the across-the-board salary hike will be just 2 per cent.

The figure is half a percentage point below the 2.5 per cent recorded in the three months to the end of February 2014 and, said XpertHR, made talk of strong wage growth in the economy “premature”.

XpertHR said in the three months to the end of February 2015 within the private sector, manufacturing and production company pay awards were worth a median 2.1 per cent. But the most common pay award was a 2 per cent increase given in 26.3 per cent of cases. Pay freezes accounted for around 10 per cent of all pay awards.

Read more about the wages debate:

XpertHR’s Sheila Attwood said the awards confirmed the “subdued nature of pay bargaining at present”.

She went on to say: “A 2 per cent pay rise over the coming year will be less than many employees had hoped for. Despite improving economic conditions, employers are sticking to their guns on low pay awards, which are only made to look more appealing by the fall in inflation. This mutes some of the optimism.”

However XpertHR also found that while pay rises are likely to remain low, employees are seeing other increases in their pay.

The group said: “It is clear that employers still do not have the ability to pay higher increases to everyone. Instead, the recruitment and retention issues that many organisations are experiencing are being addressed with one-off increases to pay being made in particular hot spots.”

The survey also found that around two-thirds of organisations are still likely to take some steps to control pay-bill costs over the coming year.

It said measures likely to be taken by private sector employers include: not replacing leavers; reducing overtime or overtime payments; lower pay rises; and redundancies.

Public sector organisations were excluded from the survey as many are covered by the government policy that restricts 2015/16 pay awards to up to an average of 1 per cent.

Image: Shutterstock

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