Pay increases remain lower than inflation

Among settlements reached in the three months to July and recorded on LRD’s Payline database, the median pay increase was 3.0% across all sectors and industry groupings – the seventh successive month that this has been the case.

Unsurprisingly, this consistency means that the median pay increase across all settlements over the entire pay round from August 2005 to July 2006 was also 3.0% for all sectors and industry groupings.

Inflation

Growth in the retail prices index (RPI) was unchanged in the year to July, whether or not mortgage interest payments are included. The consumer prices index rose by 2.4% in the year to July, slightly slower than from the previous month’s 2.5% increase.

Earnings

According to the latest provisional figures, the average earnings index including bonuses rose by 5.0% in the year to June – a sharp increase on the 4.4% revised figure for the year to May.

The difference between earnings growth in the private and public sectors widened slightly, with average increases of 5.3% and 3.8% respectively, while earnings in services (up by 4.9%) closed the gap on manufacturing (5.8%).

When bonuses are excluded, the increases for the year to June are 4.1% for the whole economy, 4.3% in the private sector, 3.1% in the public sector, 4.8% in manufacturing and 3.9% in services.