Workplace Report (May 2004)

Pay and prices

Settlements remain static, but inflation may be rising

The level of settlements as monitored by the LRD PayLine database of collective agreements showed little change this month, with the three-monthly median to April being 3.1% - a very slight increase on the 3.0% to March.

There was also little variation between sectors; the public sector remained slightly ahead of the private sector with 3.2% compared to 3.1%, and services stayed ahead of manufacturing with 3.2% compared to 3.0%.

Figures from National Statistics for average earnings increases continue to show rather more variation. While the increase for the whole economy was 4.3% for the year to March, the increase in services overall was 4.7% - and in private sector services it was 5.2%.

Bonuses

However, if the series excluding bonuses is used, the figures are very different; the overall increase is 4.1%, and in both overall and private sector services it is 4.0%. This confirms the fact we reported last month, that bonuses - particularly in the City - have caused a "blip".

On the inflation front, the gap between the different measures has narrowed a little. While the Retail Prices Index (RPI) for the year to March dropped slightly to 2.5%, the Consumer Prices Index (CPI) rose to 1.2%. The CPI is the government's preferred measure of inflation; it excludes housing costs.


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