Terror attacks put lid on pay deals

BIG PAY rises will be just a memory this year, according to a new report which blames slower global growth and a wave of redundancies after the terrorist attacks of 11 September.

Basic pay will rise by about 3% - slower growth than this year, although still ahead of inflation, says the Incomes Data Services report.

An IDS spokesman said most annual increases were above the psychologically important 2.5%. The headline rate of inflation, the annual change in the retail prices index, is 1.6%, down from 2.9% a year ago.

The IDS study found settlements in the final quarter were 'generally lower' than earlier in the year. But the rise in the minimum wage has brought some big increases.

'There are a growing number of pay freezes in sectors that have been hit hardest by the economic slowdown,' the report, which monitored 81 new pay deals covering a quarter of a million employees, says. 'But the rise in the minimum wage and continuing labour market pressures have led to double-digit percentage increases.'

Air travel and the tourist industry were worst hit by the 11 September attacks. Pilots at Air 2000, the airline owned by the First Choice holiday group, have accepted a temporary pay cut to reduce job losses. Electronics and IT have also seen pay freezes. But more than half the 11,000 retail staff at First Quench, the off-licence group, received 10.8% rises in September.

In the public sector, where the Government is trying to tackle staff shortages, pay is becoming more attractive. A nurses' pay review is expected to propose at least a 3% rise.