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Are pay rises a thing of the past?

At the beginning of the summer, the Government announced that automatic annual pay rises for many public sector workers would end in the 2015/16 financial year. It was part of a package designed to save £11.5 billion in public spending.

The change will affect millions of people in the public sector, whose pay automatically goes up according to a 'pay spine' for every year worked. The annual increases are supposed to improve loyalty and retention, and are also made in recognition of gains in experience. Many people reach the top of a pay spine in three to five years.

Analysts say that the UK is in the most sustained period of falling real earnings for fifty years, with prices rising faster than earnings over the last four years.

This has led some commentators to ask whether the UK may have seen the end of the pay rise all together. In a recent report from the Chartered Institute of Personnel and Development (CIPD) that picked out 'megatrends' from the past, the question was posed whether the end of the pay rise could be a megatrend for the future.

Many would say that wage restraint during the downturn has saved jobs, keeping unemployment at lower levels than it could have been.

But some analysts have queried whether pay rises will reappear in happier economic times, with firms still unable to give real wage increases. The CIPD report said that this had been the case for many US workers for 'some decades'.

In this scenario, it may mean that employers and managers will have to find new strategies to reward and incentivise their staff.

Acas can visit your organisation to help you understand what needs to be done to address a range of issues related to Pay and reward: how Acas can help, and can work with you to find practical solutions. This could be devising a new incentive scheme, such as share options, implementing a new reward system, or looking at flexible or cafeteria-style benefits.

There's also Acas support for public sector organisations undergoing change, including training in matters associated with restructuring, Redundancy and Managing change.

Visit the Acas Training and Business Solutions page for more information.

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