Basic Earnings Increases Have More Than Halved

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12 May 2011

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It's bad news for employees as the latest Croner Reward Index Reveals earnings increases have dropped over the last quarter. London, 11 April 2011 – The latest Croner Reward Index shows that basic earnings increases have more than halved over the quarter and total pay increases have fallen to a third of what they were in January 2011. The index published by Croner also reveals that earnings are rising at an annual rate of 0.5% for basic pay and 0.3% for total pay (including bonuses and overtime). Viv Copeland, Head of Croner Reward, says: "This will no doubt put extra pressure on people's finances given the economic squeeze currently being endured. However what may be of most concern is the total pay figure for operatives that has dropped to -0.8%, which would indicate a drop in overtime." Both basic and total pay movement figures for managers are stable in comparison for the first quarter in 2011, hovering just over 1% for basic pay and at 1.3% or 1.4% for total pay. Viv Copeland adds: "Looking back over the last year, the basic pay increase for operatives in March 2010 stood at 4.3% and at March 2011 is now down to 0.1%. The overall downward spiral that we've seen for operative pay movement since last summer paints a bleak picture. "Croner's basic index as a whole was 2.9% in March 2010 and has fallen 2.4 percentage points in a year to stand at 0.5%. The total index as a whole was 3.3% in March 2010 and is now at 0.3% - down a full three percentage points." Across-the-board settlements, taken as an average over the last 12 months are still running at 2.0% for a second consecutive month. The four-month settlement figure for all employment types is 2.3%. Viv says: "The difference between the settlement figures and the earnings movements is a downward pay drift caused by a combination of restructuring to reduce costs, lower bonuses, reduced overtime and pay freezes. "The movement figures are reflecting the impact of pay freezes which peaked at 20% in 2010 and currently 14% of our respondents have given a pay freeze in the last 12 months. "As for forecast figures, across-the-board 12 month forecasts are running at 2.5% for March 2011 which is on a par with the 2010 average and the sixth straight month the figure has been 2.5%. "All in all, Croner's figures show that the current squeeze on living standards isn't translating into vastly increased pay settlements." Notes to editors Croner Reward Earnings Index Croner Reward has one of the largest continuously updated pay databanks in the UK and analyses the information held each month. The results of the Croner Reward Index are compiled on a moving average basis covering three months. The Index shows the change in median basic earnings (guaranteed regular pay) and the change in median total pay (including overtime and bonuses) over 12 months. When collecting information on pay levels we also ask participants to tell us what their last across-the-board settlement (pay award) was, and what their forecast is for their next pay award. We analyse these over both a 12 month and four month period for those companies who have had a pay award. We measure those with a pay freeze separately. The difference in these two measures is pay drift, which can be either upwards or downwards. Downwards pay drift would arise from pay freezes, pay cuts, de-layering, reduced bonuses and overtime. Upwards pay drift would arise from variable performance based pay awards, higher bonuses, increased overtime.

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