Inflation catches up with pay rises

The end of the current pay round saw a slight slowing in the rate of pay increases, according to the LRD PayLine database of collective agreements. The three-monthly median increase to July was 3.0% - identical to the Retail Price Index (RPI) figure for inflation in the year to July.

Across the pay round as a whole (August 2003 to July 2004), the median pay rise was 3.1%. However, when weighted by the number of workers covered, agreements this year yielded a median increase of 3.3% - indicating that better results were achieved with larger employers.

The annual median increase was slightly higher in the public sector (3.2%) than the private sector (3.1%). For manufacturing and services, the figures were 3.0% and 3.2% - a smaller difference than in the previous pay round.

While manual workers' pay grew more slowly than that of non-manual workers in 2002-03, this year the trend was reversed (3.2% compared to 3.0%).

Figures from other pay analysts agree with the 3.0% three-month median yielded by the LRD data.

Earnings

Earnings (excluding bonuses) grew by 4.3% in the year to June - an increase on the previous month. Analysts have increased their forecasts for average earnings growth across 2004 to 4.5%.

The average forecast of RPI in the fourth quarter of 2004 has also increased, to 3.3%.