Unhealthy Pressure: How Physician Pay Demands Put the Squeeze on Provincial Health-Care Budgets
The pay squeeze: implications for ER Ken Mulkearn, Head of Pay & Research, IDS Manchester Industrial...
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Transcript of The pay squeeze: implications for ER Ken Mulkearn, Head of Pay & Research, IDS Manchester Industrial...
The pay squeeze: implications for ERKen Mulkearn, Head of Pay & Research, IDS
Manchester Industrial Relations Society5 December 2013
Pay awards in 2013 from IDSPay.co.uk
2
Pay freeze 0.1-1.99% 2.0-2.99% 3.0-3.99% 4.0%+0%
10%
20%
30%
40%
50%
60%
8%11%
51%
27%
3%
Distribution of pay settlements, 2013
% o
f pay
sett
lem
ents
Sector-by-sector outcomes 2013
• Manufacturing median pay award – 2.5%; private services – 2.5%; not-for-profit organisations – 2%; public sector – 1%
3
Below 2.5% At 2.5% Above 2.5%
Construction (1.75%)
Engineering Aerospace & defence (3%)
Retail (2%) Financial services
Chemicals (2.8%)
Pharmaceuticals (2.4%)
Food, drink & tobacco
Energy & water (3%)
Motor industry (3%)
Average Weekly Earnings (AWE)
• 0.7% earnings growth across economy (September 2013)
• Total earnings in private sector up 1.1%, public sector flat
• Why is earnings growth below pay settlements?
• Don’t measure the same thing – AWE affected by different changes in pay and labour market to IDS pay settlements
• Overtime, working hours, bonuses, market adjustments and shifts in structure of workforce all affect AWE
4
Real wages negative since pre-recession
5
Aug/0
6
Nov/0
6
Feb/
07
May/0
7
Aug/0
7
Nov/0
7
Feb/
08
May/0
8
Aug/0
8
Nov/0
8
Feb/
09
May/0
9
Aug/0
9
Nov/0
9
Feb/
10
May/1
0
Aug/1
0
Nov/1
0
Feb/
11
May/1
1
Aug/1
1
Nov/1
1
Feb/
12
May/1
2
Aug/1
2
Nov/1
2
Feb/
13
May/1
3
Aug/1
3
-4
-3
-2
-1
0
1
2
3
4
Pay rises adjusted by RPI, 2005-2013
Real-terms pay rises
Source: IDS
The labour market
6
6
6.5
7
7.5
8
8.5
Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014
CE
DB
GS
LB
NO
RBS
Rounded Average
%
Forecasters CE: Capital Economics; DB: Deutsche Bank; GS: Goldman Sachs; LB: LLoyds Banck Commercial Banking; NO: Nomura; RBS: Royal Bank of Scotland
City forecasts of unemployment rate
Changes in public sector employment 1992-2012
7
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
-400
-300
-200
-100
0
100
200
Annual headcout
change (
thousands)
Inflation outlook
8
Business investment
9
2007
Q4
2008
Q2
2008
Q4
2009
Q2
2009
Q4
2010
Q2
2010
Q4
2011
Q2
2011
Q4
2012
Q2
2012
Q4
2013
Q2
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
Business investment Chained volume measure, seasonally adjusted NPEL
What might happen on the reward front in 2014?
10
Influences on reward in 2014
Upward pressure? Downward pressure?
Economic recovery and potential impact on business investment
Fragility of recovery and susceptibility to external shocks
Recruitment and retention issues
Slow pace of recovery in labour market
The role of reward in employee engagement
Inflation forecast to stay flat into 2014
Employers’ intentions for 2014
27%
9%
64%
Pay expectations for 2014 relative to 2013 awards
The same
Higher
Lower
Source: IDS
11
People issues
12
Recru
iting
/reta
inin
g ke
y st
aff
Empl
oyee
eng
agem
ent a
nd m
otiv
atio
n
Keepi
ng la
bour
cos
ts in
che
ck
Makin
g su
re p
ay is
alig
ned
with m
arke
t
Dealin
g with
skill
s sho
rtage
s and
/or a
nom
alie
s
Linki
ng p
ay to
pro
duct
ivity
Aligni
ng p
ay ri
ses w
ith in
flatio
n0%
10%20%30%40%50%60%70%80%90%
100% 96% 92% 88%76%
63%54%
36%
'Very important' or 'important' issues for reward strategies in 2014
% o
f re
spondents
The rise of the ‘Living Wage’
13
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
1
2
3
4
5
6
7
0
2
4
6
8
10
12
Rate and increases in the National Minimum Wage 1999-2012
Adult NMW £ph % increase
Adul
t NM
W £
ph
% N
MW
incr
ease