Workplace Report (July 2012)

Pay and prices

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.


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