ABSTRACT
This chapter considers how organisations decide pay levels. Three main areas are considered: the method and locus of determining pay; the criteria used by organisations in fixing pay levels; and the changing nature of pay information sources. The chapter points to the growing divide between private sector and public sector pay determination. In the private sector the major method used to determine pay is management discretion alone while in the public sector collective bargaining machinery remains primary. The criteria used to make decisions about pay levels have also changed in recent times, with increasing emphasis upon factors such as organisational performance, ‘ability to pay’ and recruitment and retention, although inflation retains a modal influence. Finally the increasing difficulty in tracking pay changes is discussed. As collective bargaining has diminished, transparency has reduced and hence the opportunity for employers to obscure the detail of pay decisions has increased. There are now fewer reliable sources of publicly available data available to track both pay levels and the diffusion of new pay practices and those that remain are of decreasing use.
