Pay hikes at two-year high as rising inflation feeds through

Pay awards
have hit a two-year high, according to research by independent analysts
Industrial Relations Services.

Settlements
increased dramatically to 3.4 per cent in the three months to January 2001 – a
rise of 0.4 per cent from December.

The IRS
measure stands at its highest since November 1998. Half of all pay deals are
now worth between 3 and 3.7 per cent, up from between 2.8 and 3.5 per cent in
December 2000.

Report
author Jeremy Baugh said, “The upturn in January deals reflects the impact of
higher headline inflation in the final quarter of last year, which has fed
through into rising settlement levels in the early part of 2001.”

Almost a
quarter of deals are now pitched at 4 per cent or above, compared with 15 per
cent of deals for the previous quarter. At the same time, there has been a fall
in the proportion of settlements below 3 per cent, from nearly a third to just
over a tenth.

Baugh
said, “Falling inflation, the predicted slowdown in the UK economy and the
continuing pressure on employers to deliver low-cost competitive pay deals are
all likely to help restrain demands at the negotiating table and mitigate
against higher settlements in the coming months.

“The
evidence at the start of the busy January wage round suggests that downward
wage pressures will intensify, raising the prospect of a fall in basic pay
awards in the months ahead.”

The IRS
monthly pay analysis is based on 85 basic pay reviews, in the three months to
January, covering 295,000 employees.

www.irseclipse.co.uk

By Mike
Broad

 

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