PAY - 31.05.2011

Paying over the odds for staff?

Pay freezes

One of the hardest ways to cut costs is to freeze staff pay. We’ve all seen what happens when the big companies try it, with plenty of threatened strike action in the past 18 months. When it comes to SMEs though, it’s the employer that’s often taking the hit with 59% having frozen their own pay, and over a quarter having cut it. Just 5% say they have cut staff pay, though a third have frozen it. But before you make any decisions, it’s worth benchmarking what you pay against a national average.

New figures

Every year the Office for National Statistics (ONS) releases its Annual Survey of Hours and Earnings. The latest figures available are from the 2009 survey which show: (1) gross annual earnings for full-time employees were £25,800, an increase of 2.6% from 2008; (2) gross weekly earnings for full-time employees were £489, up 2% from £479 in 2008; and (3) gross hourly earnings, excluding overtime, for full-time employees were £12.34, up 3.9% from £11.88 in 2008.

Over the odds?

Don’t panic if these figures seem a lot higher than you are paying. Remember, these are averages across all adult workers. When you look at the different regions, for example, the weekly average in London stands at £627 (28% higher than the national average) while in the North East it’s £436 (11% below the national average). Of course, there is also wide variation depending on the type of job as this table shows:

Using the figures

The 2010 survey will be out by the end of the year, so when it comes to the next round of pay reviews, you can make use of the ONS information in negotiations. But make sure you take into account your region and sector, as well as other factors such as any perks/performance-related bonuses. The national average is just that - an average.

Tip. There is plenty more detail available on the ONS site (http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=15236).

What you’ll save

By checking the ONS stats you can ensure that you’re not paying wildly over the odds and have a better chance of implementing pay freezes. For example, Boston Build is about to review the pay for its sales and customer service staff. It is already paying above the national average, so implementing a pay freeze will save £3 per week per employee, equating to £2,340 a year.