George Chichester
Senior Director, Farm & Estate Management
The abolition of England’s Agricultural Wages Board (AWB) in 2013 gave farm employers greater freedom to negotiate wages with their farm workers.
However, it also gave them an added headache – how to go about working out a fair deal.
This can be a difficult process, particularly in a year like this one, where low commodity prices have continued to put significant pressure on farm profitability.
With this in mind, each year Strutt & Parker analyses what is happening in the rest of the economy so we can make a recommendation as to an appropriate level of rise.
We do this in early September, ahead of the 1 October date when pay increases traditionally take effect.
This year we are recommending employers apply a 1.0% increase to farm workers’ wages for the coming year.
This is based on a 0.6% rise in the Consumer Price Index (CPI) and a 1.1% increase in a new, more accurate form of the Retail Price Index (known as the RPIJ). Public sector workers have also generally been awarded a 1% increase for the 2016/17 year.
In addition, the Northern Ireland Department of Agriculture – which still has a pay review body – has determined an increase in agricultural wages of 1.9% for this year, taking the basic Grade 1 rate to £6.76/hr and their Craftsman’s rate (Grade 4) to £8.31/hr. In Wales, where rates were last revised in February 2016, the Grade 4 Craftsman rate is £8.72/hr.
The Scottish Wages Board has delayed their pay award until April 2017.
This recommendation means the most basic payment – the equivalent to the old AWB Grade 1 – is effectively the same as the National Living Wage (NLW) at £7.20/hr.
However, in practice very few farm workers are paid on Grade 1 level – most are paid as “Craftsman” or Grade 4 level.
So the effect of such an increase – when added to the 1% increase which we recommended to our clients last year, 2.3% the previous year and 1.9% the year before that – is to raise the Craftsman’s rate to £8.73/hr.
Employers also have the option of paying individuals a discretionary bonus at the end of the year to reflect high performance.
It is also worth noting that since last year most farm employers will now have completed the auto-enrolment of their employees for a new pension scheme, which is now costing the employer an additional 1% of wages. This pension contribution is set to rise to 2% in 2018/19 and 3% from April 2019