Summary of the editorial from IDS Pay Report 975, April 2007

Housing costs increase upward pressure on labour market ‘hot spots’

A combination of rising house prices and generally strong labour markets is forcing large employers to adapt their pay systems and raise salary levels in various ‘hot spots’ around the country. According to mortgage lenders the Halifax, key public sector workers are being priced out of the housing market in 70 per cent of towns across Britain, with affordability problems worst in London and the South West. If this is the case for public sector workers, it is likely to be much the same picture for many lower-paid staff in the private sector as well. In addition, the labour market remains strong. Our last look at the official statistics showed that despite a small rise in economic inactivity, coming mainly from students as they enter their summer exam period, employment continues to rise and unemployment continues to fall (IDS Pay Report 974, p.14). The latest figures from the ONS show that this continues to be the case. Low claimant count rates mean virtually full employment in many parts of England.

The result of all this is that some national employers are moving to introduce pay systems that are differentiated by location, with higher pay on offer in those areas that are deemed to have the greatest recruitment and retention problems. The general approach appears to be one in which companies operate descending salary bands or zones across four or five areas as follows: London, the rest of the South East (dubbed ‘Roseland’ by IDS in the 1980s, and the name has stuck), large towns and other ‘hot spots’, and the remainder of the country. As such, it is very much an adaptation of previous approaches, rather than a move to complex ‘localised’ pay systems.

... the full editorial can be read in IDS Pay Report 975

Pay Report 975 also includes the results of the recent IDS Pay in Nurseries Survey

In March 2007, IDS carried out a survey of 82 employers in the independent nursery sector, covering over 6,500 employees. The survey looks at the workforce profile, pay levels, recruitment and retention issues and the impact of the National Minimum Wage (NMW) uprating in October 2006 to £5.35 an hour on nurseries’ pay policies.

For more information click here