Service salaries highlight ‘two speed’ economy

Pay
rises in the service sector are still much higher than those in the
manufacturing sector, according to CBI figures.

Manufacturing
pay settlements stayed at 2.9 per cent in the three months to July while
service sector pay awards averaged 4.6 per cent.

The
sharp rises in service sector pay were influenced by a number of high awards in
May among professional services firms that have small numbers of employees.

“Clearly,
it’s a tale of a two speed economy. Manufacturing settlements are relatively
low and reflect major downward pressure on prices, coupled with the impact of
the global slowdown. Coming on top of recent official figures which showed
inflation under control, we remain confident our data do not put the
government’s inflation target at risk,” said Sudhir Junankar, head of economic
analysis at the CBI.

This
time last year manufacturing settlements averaged 3.1 per cent and service
settlements averaged 3.8 per cent. Since August 2000, 11.5 per cent of
manufacturers said they had experienced pay freezes lasting at least six
months. More than two thirds of the awards made were less than 3.5 per cent.

The
survey covers 1,400 private sector awards for 1.5 million employees each year.

By
Katie Hawkins

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