Workplace Report (November 2008)

Pay and prices

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%.


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