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Pay awards hover around 3% for first quarter of 2012, finds IDS

The key figure for pay settlements in the private sector is 3% for the first quarter of 2012, according to the latest data from the Incomes Data Service.

The 3% figure represents the median pay settlement recorded in the three months to the end of March 2012, as well as the average increase and the most commonly-recorded individual increase over the period.

These figures are all unchanged from the previous reference period, covering the three months to the end of February 2012. Similarly unchanged is the interquartile range, which spans the fairly narrow range from 2.5% to 3.5% - reflecting the fairly homogeneous nature of pay awards in the first quarter of 2012. More than one in five settlements were recorded at exactly 3%.

IDSPay.co.uk recorded an increase in the proportion of settlements recorded between 3 and 3.99%, at 38% of deals compared to 33% in the three months to the end of February. This increase further underlines the importance of 3% as the headline figure for pay settlements at this stage of the year. The proportion of settlements resulting in pay freezes has remained fairly constant, at 8% of pay reviews, primarily in the manufacturing, construction and not-for-profit sectors. At the other end of the range, some 20% of reviews resulted in awards of 4% or higher.

Ken Mulkearn, editor of IDS Pay Report, said: "While pay settlements are showing more strongly than last year, the median remains below inflation for the moment. The failure of wage rises to keep up with increases in the cost of living is placing downward pressure on household incomes, alongside other factors, and this in turn is having an effect on consumer spending. As a result, what happens to inflation will be extremely important for decisions on pay over the coming months. And in a period when the spotlight is firmly on the figures for economic growth, pay outcomes will also have significance for the economy as a whole."