Autumn fall in settlements

There has been a slight dip in pay settlements.

The latest figure for pay settlements from LRD’s Payline database of collective agreements shows a dip in the median (mid-point) for the three months to October to 2.4% from the 2.5% recorded back to April. With inflation measured by the Retail Prices Index (RPI) standing at 2.3% for the year to October settlements are just ahead of inflation, which was unchanged from the previous month.

The median varied by sector with the private sector median being 2.5% but the public sector just 1.9%, and while manufacturing settlements had a three-monthly median of 2.5% for services it was 2.2%.

Independent forecasts for the UK economy show that the average forecast for RPI inflation in the fourth quarter of 2015 is 3.0%, so living standards may be hit again.

The latest official figures on Average Weekly Earnings show that for the year to September total pay across the whole economy rose by just 1.4% — up from 0.9% in the year to August, but still well below RPI inflation.

Private sector earnings rose by 1.6% (up from 0.9%), while in the public sector the increase was unchanged at 0.9%.

In services, the increase was 1.2% (up from 0.8%), but in manufacturing there was a sharp increase from 1.4% to 2.3%.

Under the government’s preferred measure of inflation, the Consumer Prices Index (CPI), inflation in October was up to 1.3% from 1.2% the previous month.

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