Inflation and pay gap closes

Pay settlements averaged 2.6% in the three months to September, according to the latest data from LRD’s Payline database. This median (midpoint) figure is down from the 2.7% recorded for August.

The level of settlements varies by sector, with the private sector median steady at 2.8% but the public sector down to 1.3% from 1.5%. While manufacturing settlements averaged 3.0%, those in services only averaged 2.5%.

The figures for the year to September are 2.8% across all agreements but just 1.2% when weighted by workers covered, this figure being dragged down by the public sector pay freeze.

The annual rate of inflation, as measured by the Retail Prices Index (RPI), fell to 2.6% in September — down from 2.9% in August. Therefore, the gap between settlements and inflation has disappeared, for the moment at least.

Inflation has also fallen on the other measures. The government’s preferred measure — the Consumer Prices Index (CPI) — was down from 2.5% to 2.2% — its lowest level since November 2009.

The latest official statistics on average weekly earnings show that total pay, including bonuses, rose by an average of 2.3% in the year to August. This was sharply up on the 1.5% recorded for the year to July.

The level of increases varied by sector with the public sector averaging 3.0% but the private sector only 2.2%, although the public sector excluding the nationalised banks was only 2.2%. Manufacturing averaged 2.5% and services 2.3%.