Workers’ living standards to improve?

The latest data hold out some hope for an improvement in living standards. Pay settlements from LRD’s Payline database remained stable at 3.0% while inflation under the Retail Prices Index (RPI) fell to 2.8%, putting settlements ahead of inflation.

The median (midpoint) increase in settlements has been unchanged since January, while RPI inflation has gradually fallen from 3.9% to 2.8%.

The government’s preferred measure of inflation, the Consumer Prices Index (CPI), was down to 2.4% for the year to June from 2.8% the previous month.

The figures from Payline show some variation by sector with private sector settlements averaging 3.0% rises as did manufacturing. But in the public sector the median settlement was just 1.8% and in services it was 2.9%. The annual figures to June showed a median of 2.6% by agreements but only 1.3% if weighted by workers covered, reflecting the impact of the public sector pay freeze.

However, the latest official figures on average weekly earnings show total pay increased by 1.7% in the year to May. The private sector increase was 1.8%, but in the public sector (excluding financial services) it was only 1.1%. Average earnings in manufacturing increased by 2.9%, while in services the increase was only 1.6%.

If bonuses are excluded, the rises in weekly earnings are: 1.8% for the whole economy, 2.0% for the private sector, 1.0% for the public sector, 2.4% for manufacturing and 1.6% for services.