Workplace Report (September 2013)

Pay and prices

Price rises eat away pay rises

The inflation rate, as measured by the Retail Prices Index (RPI), went up, but as pay settlements remained steady, living standards have been hit harder.

That is because the latest figures from the LRD Payline database of collective agreements show that increases in the three months to August had a median (mid-point) of 2.5% across all agreements, unchanged back to March. Meanwhile, the RPI inflation rate rose to 3.3% from 3.1% and the gap between pay and prices widened to 0.8 percentage points.

The level of increases varied by sector with the private sector averaging 2.5%, but the public sector just 1.0%. In manufacturing, increases averaged 2.8%, while for services the average was 2.2%. The average for the year to August was 2.5% by agreements, but just 1.4% when weighted by workers covered; showing the effects of the government squeeze on public sector pay.

Inflation varied depending on the measure used and the government’s preferred measure, the Consumer Prices Index (CPI), fell slightly to 2.7% from 2.8%.

The latest official data on Average Weekly Earnings show an increase of just 0.6% in the year to July. Manufacturing earnings were up by 1.9%, but in services the increase was only 0.6%. Private sector earnings rose by 0.8%, but the public sector managed just 0.1% (if the nationalised banks are excluded it was 0.3%).

Excluding bonuses, the rises were: whole economy 1.1%; private sector 1.4%; public sector 0.3%; manufacturing 2.1%; services 1.0%.


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