Pay settlements lag behind inflation

Pay settlements are now trailing behind Retail Prices Index (RPI) inflation, according to an analysis of the Labour Research Department’s Payline database.

But while private sector settlements show signs of responding, pay restraint is beginning to bite in public sector figures. The overall headline rate for settlements is steady at 2%. Meanwhile, RPI inflation has remained above 5% in the year to May.

Settlements on the Payline database show 2.0% as the central trend for the three months up to and including May, maintaining the position from April. That is close to National Statistics' figures for the growth in average weekly earnings (AWE, excluding bonus payments) of 1.9% for the year to March and 1.7% for the year to April.

The Payline figures represent a clear move upwards compared with winter/spring levels. But, unless there is a marked change, living standards will be falling for many employees this year because of below-inflation pay increases, potentially hitting consumer spending.

For details of some of the most recent pay settlements on Payline follow the link below.

www.lrd.org.uk/index.php?pagid=18