Settlements show little movement

The latest figures from LRD’s Payline database show pay settlements still trailing behind inflation. The median increase in the three months to November was 3.5%, up slightly on the October figure of 3.4% but still well below the 4.2% rate of growth in the retail prices index (RPI) over the year to October. (November’s RPI figure had not been published as we went to press.)

The gap between public- and private-sector pay awards has again widened: the private-sector median for the three months to November moved up to 4.0%, while its public-sector counterpart fell to 2.5%. And while the median in manufacturing has leapt from 3.5% to 4.0%, pay rises in services have increased only slightly to 3.4%.

Earnings

The average earnings index (including bonuses) for the whole economy rose by 3.7% in the year to October – a slowdown from the 4.2% reported in the previous month.

If bonuses are excluded, the figure is 3.5%, unchanged from September. Manufacturing and services are both on 3.6%, with the private sector just ahead of the public sector (3.5% and 3.4% respectively).

Forecasts

According to the latest forecasts published by the Treasury, the RPI will drop sharply to 2.6% by the fourth quarter of 2008; however, individual forecasts range from 1.5% to 3.8%. Average earnings increases are forecast to hold up at 4.0%.