Workplace Report (July 2007)

Pay and prices

Pay closes the gap slightly on inflation

The median value of pay settlements recorded on our Payline database increased by 0.2 percentage points to 3.7% in the three months to June, with the private sector median rising to 4.0% while its public sector counterpart remained at 3.0%. Service sector deals are still outstripping those in manufacturing, with medians of 4.0% and 3.5% respectively. Looking back over the 12 months to June, the median increase on lowest basic pay has been 3.5%.

Inflation

The Retail Prices Index (RPI) rose by 4.4% in the year to June, slightly up on the May figure of 4.3%. The RPI excluding mortgage index payments (RPIX) maintained steady growth of 3.3%, while the Consumer Prices Index (CPI) increased by 2.4% – just below the 2.5% seen in the year to May. With the RPI remaining well above 4%, it is unsurprising that the average forecast of inflation for the last three months of 2007 has been revised upwards again to 3.7%.

Earnings

Growth in average earnings for the year to May was up 3.5%, 0.1 percentage points higher than April’s revised figure. The increase was accounted for by manufacturing earnings, which were up sharply to 4.5% while the service sector’s earnings growth fell back to 3.4%.

If bonuses are excluded, the overall increase was 3.4%, with the private sector up by 3.5%, the public sector by 3.1%, manufacturing by 3.8% and services by 3.5%.


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