Settlements stabilise well above prices

The LRD Payline database is fairly stable at present, with a 3.0% median pay increase both for settlements reached in the three months to February and for those across the entire pay round to date.

These medians are substantially above inflation, whereas a year ago the gap between median settlements and inflation was just 0.2%.

There is no variation in settlements between the different sectors, with all categories recording a 3.0% median. The median figure for the past 12 months has fallen slightly to 3.2% when calculated according to the number of settlements reached – but is up to 4.0% when weighted by workers covered, indicating that workers in larger bargaining groups have secured larger pay rises.

Inlation

The retail price index (RPI) in the year to February was unchanged on the previous month, as was the RPI excluding mortgage interest payments; they remain at 2.4% and 2.3% respectively. The consumer prices index rose slightly, from 1.9% to 2.0%.

Earnings

The latest average earnings figures for the whole economy, covering the year to January 2006, show a 3.0% increase – well below the 4.1% revised figure for the year to December 2005. The public sector (4.1%) is well above the private sector (2.8%).

However, if bonuses are excluded from earnings, the average increase for the whole economy is 4.0%, with the public and private sectors averaging 3.9% and 4.0% respectively.