what do employees think about pay
TRANSCRIPT
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What do employees think about pay?
Mark Beatson, Chief EconomistCharles Cotton, Pay and reward adviser
Presentation to ONS Labour Market Statistics conferenceMarch 2014
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Contents
1. How important is pay to employees?2. How satisfied are employees with their pay?3. Do employees think they are paid fairly?4. What did employees think about their last pay rise?5. What do employees expect for the year ahead?6. International comparisons7. Conclusions
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1. How important is pay to employees?
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Importance of pay for decision to seek paid work(% of employees, GB)
1989 1997 20050%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Importance of high income in a job
Neither important nor unimportantImportantVery important
1996199819992000200120070%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Main reason for working
To earn money of my ownTo earn money to buy extrasNeed money for basic essentials
Source: British Social Attitudes Surveys.
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2. How satisfied are employees with their pay?
Employee descriptions of their pay(% of employees, GB)
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Very low A bit low Reasonable
Source: British Social Attitudes Surveys.
Employee satisfaction with pay(WERS, mean score, UK)
Private sector
Satisfaction with pay
Job security
Overall job satisfaction
0 1 2 3 4 5
2011 2004
Public sector
Satisfaction with pay
Job security
Overall job satisfaction
0 1 2 3 4 5
2011 2004
Source: van Wanrooy et al, ‘Employment relations in the shadow of the recession’.
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Employee satisfaction with pay(“Considering all my efforts and achievements in my job, I feel I get paid appropriately”,% employees, GB, 2010)
AllMale
Female15 to 2425 to 3435 to 4445 to 5455 to 64
Works full-timeWorks part-time
Not union memberUnion member
1st income decile2nd income decile3rd income decile4th income decile5th income decile6th income decile7th income decile8th income decile9th income decile
10th income decile
0% 10% 20% 30% 40% 50% 60% 70% 80%
Agree strongly Agree
Source: European Social Survey, 2010.
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3. Do employees think they are paid fairly?
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Justice and fairness of employees’ pay(% of employees, GB)
1999 20090%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
What I deserveLess than I deserveMuch less than I deserve
1999 20090%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
About fair for meLittle less than fairMuch less than fair
Source: British Social Attitudes Surveys.
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Pay equity at the workplace(views on gap between highest and lowest paid at the workplace, % of employees, GB)
1983
1985
1987
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
14%
31%
49%
Time series
Much too big Too big About right
15 to 24
35 to 44
55 to 64
Male
Degree
A-level or equivalent
CSE/GCSE D-G
Not a TU/SA member
Works full-time
Managers/professionals
Junior non-manual
Semi-skilled/personal services
High income
Low income
0% 10%
20%
30%
40%
50%
60%
Cross-section, 2009
Much too big Too big
Source: British Social Attitudes Surveys.
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Pay equity in society(% employees who agree ordinary people do not get their fair share of the nation’s wealth, GB)
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
14%
48%
26%
Agree strongly Agree Neither agree nor disagree
Source: British Social Attitudes Surveys.
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4. What did employees think about their last pay rise?
CIPD employee attitudes to pay surveys
• What – employer pay decisions; the basis of these choices; employee reactions to these decisions; and employee pay and bonus decision forecasts.
• When – research carried out between 19 December 2013 and 7 January 2014
• How – 2,683 working adults, across all industrial sectors, questioned via an online survey by YouGov
• Why – pay is a significant element of total costs, what is the ROI on that expenditure
Changes in the nominal pay of employees in the previous 12 months(% of employees, excluding don’t know/can’t remember responses)
2008 2009 2010 2011 2012 20130
10
20
30
40
50
60
70
80
90
100
3 5 4 5 3
26
42 45 4941
70
51 50 4651
Pay cut Pay freeze Pay increase
Respondents were instructed to exclude promotions, demotions, regrading and new jobs.Sources: CIPD Employee attitudes to pay surveys, 2008 to 2011 and CIPD Employee Outlook survey, winter 2013/14.
Pay rises in 2013
Private Public Voluntary All
Upper quartile 4.00% 1.00% 2.00% 3.00%Median 2.10% 1.00% 2.00% 2.00%Lower quartile 1.90% 1.00% 1.00% 1.00%Mean 4.48% 2.78% 2.55% 4.00%
Source: CIPD Employee Outlook survey, winter 2013/14.
Employee satisfaction with most recent pay outcome (% of employees, excluding don’t know/can’t remember responses)
Pay rise
Pay freeze
Pay cut
All
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
68%
24%
15%
47%
29%
69%
81%
48%
DissatisfiedSatisfied
Source: CIPD Employee Outlook survey, winter 2013/14.
Why employees were dissatisfied with pay outcome(% of employees dissatisfied)
Did not keep pace with increases in the cost of living/inflation.
Did not reflect how well I had performed at work.
Pay is below what I could get elsewhere for doing the same job.
Below the pay increase of senior management.
Did not reflect the state of the economy.
Did not reflect my experience.
0% 20% 40% 60% 80%
47%
32%
26%
14%
4%
16%
65%
19%
15%
12%
11%
9%
2013 (n=397)2012 (n=320)2011 (n=260)2010 (n=244)2009 (n=201)
Source: CIPD Employee Outlook survey, winter 2013/14.
Why employees were satisfied with pay outcome(% of employees satisfied)
Reflected the state of the economy.
Reflected how well I had performed at work.
More than I received last year*.
Pay is at or above what I could get elsewhere for doing the same job.
Kept pace with the cost of living/inflation.
Reflected how much money the organisation had to make a pay award.
Reflected my experience.
Did not discriminate against me.
0% 10% 20% 30% 40%
24%
24%
18%
31%
19%
12%
12%
21%
20%
20%
17%
14%
14%
8%
7%
19%
2013 (n=917)2012 (n=1,020)2011 (n=949)2010 (n=1,072)2009 (n=902)
Source: CIPD Employee Outlook survey, winter 2013/14.
Employee satisfaction with pay outcome depends on the quality of communication(% of employees, excluding don’t know/can’t remember responses)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
74%
58%
36%
15%19%
25%
39%
63%
80% 78%Satisfied Dissatisfied
Source: CIPD Employee Outlook survey, winter 2013/14.
How many employers communicate?
• 51% of employees received an explanation over the pay decision made by their employer in 2013, down on the 62% in 2012.
Pay communications by sector, 2013Sector Increase Freeze Cut All
Private 55% 41% 55% 49%
Public 61% 50% 71% 56%
Voluntary 64% 30% 61% 61%
Source: CIPD Employee Outlook survey, winter 2013/14.
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5. What do employees expect for the year ahead?
Employees’ one year ahead pay predictions(% of employees)
2009 2010 2011 2012 20130%
10%
20%
30%
40%
50%
60%
70%
80%
67%
58% 58%55% 54%
25%
33% 32% 34% 34%
6% 7% 8% 9% 10%
Pay risePay freezePay cut
Sources: CIPD Employee attitudes to pay surveys, 2008 to 2012 and CIPD Employee Outlook survey, winter 2013/14.
Employee pay predictions for 2014
Private Public Voluntary All
Upper quartile 4.00% 2.00% 3.00% 3.00%Median 2.00% 1.00% 2.00% 2.00%Lower quartile 2.00% 1.00% 1.00% 1.00%Mean 4.02% 2.64% 2.73% 3.66%
Source: CIPD Employee Outlook survey, winter 2013/14.
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6. International comparisons
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Importance of a high income in choosing a job(% of employees, 2010)
Denmark
Switzerland
Sweden
Ireland
Germany
France
Slovakia
Slovenia
Israel
Norway
Ukraine
Greece
Poland
Cyprus
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Important Very important
Source: European Social Survey, 2010.
Perceptions of pay across Europe
Slovakia
Lithuania
Hungary
Poland
Slovenia
Israel
Portugal
France
Germany
Cyprus
Northern Ireland
Denmark
Ireland
Switzerland
0% 10% 20% 30% 40% 50% 60% 70%
57%57%
“Considering all my efforts and achievements in my job, I feel I get
paid appropriately” (% agree/strongly agree)
Hungary
Lithuania
Albania
Kosovo
Slovakia
Italy
France
Estonia
Slovenia
Montenegro
Finland
Spain
Germany
Austria
Ireland
Cyprus
Netherlands
Denmark
0 10 20 30 40 50 60 70
53
“I am well paid for the work that I do?” (% agree)
Sources: Left panel: European Social Survey, 2010.; Right panel: European Working Conditions Survey, 2010.
Correlation of perceptions of pay with level of pay
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,0000%
10%
20%
30%
40%
50%
60%
70%
Mean annual earnings, 2010 (US$ 2012 PPP)
% agree pay is “fair”
UK
Sources: European Working Conditions Survey 2010 (perceptions of pay); OECD (average earnings).
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7. Conclusions
• Pay is the most important reason why most people work – though declining in importance?
• Pay is important for job choice• About half of employees satisfied with their pay – is this going
up?• Satisfaction with pay associated with relative pay levels• Satisfaction with recent pay rises has held up relatively well
despite average earnings falling in real terms• Short-term pay expectations subdued• Employee satisfaction with pay in the UK relatively high
compared with European countries – because UK employees relatively well paid