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Management pay will struggle to keep pace with inflation in 2013, reveals report

Managers' and professionals' incomes will struggle to keep pace with inflation, with average pay increases of 2.2% forecast for 2013, reveals a report from HR research organisation Incomes Data Services (IDS).

The report, Managers Benchmark Pay Report, reveals public sector managers will be worse affected than employees in the private sector. IDS forecasts that public sector pay will increase by just 0.7% on average for managerial and professional staff.

The report is based on a survey of 179 public and private sector organisations, it covers all aspects of management reward including pay rises, salaries, bonuses and pensions.

Private sector pay awards in 2013 are expected to be more generous, according to the report. The report predicts an average 2.6% pay rise across all private sector industries. However, this will be below the Office of Budget Responsibility's 3% RPI inflation forecast for 2013.

The report shows that salary rises are not the only aspect of management pay that has been under strain, with bonuses also suffering. In 2012 the report found that bonus payouts came in below 'on-target' levels as the weak economy meant more businesses were unable to hit the performance targets needed to trigger more generous bonuses.

In the private sector, more HR professionals think management bonuses will be lower next year than higher. One in three private sector employers believe that bonuses will be lower in 2013 than in 2012. Fewer than one in six believe that bonuses will be higher. The remainder, just fewer than 50% of managers believe bonuses will remain the same.

The report showed that in the private sector, median salaries for the highest level of management covered were well above £100,000. Salaries for non-board directors in the private sector were £115,756. Lower down the scale, function heads could expect to earn £89,500, senior managers £67,300, middle managers £49,000 and junior managers £36,895.

Adam Cohen, researcher at IDS and author of the report, said: "Our latest figures suggest that 2013 will be the third year running that managers and professionals will not have seen above inflation pay rises.

"Pay awards declined sharply in 2012, and the signs from HR departments are that many managers and professionals will again see their pay struggle to keep pace with inflation in the coming year."

Cohen added: "Public sector managers in particular are only likely to enjoy inflation-busting pay rises if they secure a promotion or move jobs."