Pay gap narrows as inflation tumbles

The latest figures from LRD’s Payline database show the median for settlements in the three months to October down to 3.8% from the 4.0% recorded in earlier months.

There is some variation between sectors with the biggest between the private sector at 3.9% and the public sector at 2.9%. While manufacturing had a median of 3.9% the service sector was slightly lower at 3.8%.

Inflation fell on all three measures in the year to October. The retail prices index (RPI), which is the most popular measure for negotiators, fell to 4.2% from the 5.0% for the year to September, so the gap between inflation and settlements narrowed sharply.

RPIX (which excludes mortgage interest payments) fell to 4.7% from 5.5% in September. The government’s preferred measure of inflation, the consumer prices index (CPI), also fell to 4.5% for the year to October from the 5.2% recorded for the year to September.

Average earnings increases for the year to September were 3.0% across the whole economy, down from 3.2% in the year to August.

The figures varied sharply between the public and private sectors with the private sector averaging increases of 2.8%, but the public sector averaged 4.0%. These figures include bonuses and measure all elements of pay including increments. The figures for manufacturing and service sectors were both 3.1%.