New year pay rises may put firms under pressure

The new
year wage round could prove painful for employers, following the release of
figures showing pay awards have broken the 3 per cent barrier for the first
time in almost two years.

But the
rise is seen as temporary and unlikely to influence the bigger pay awards
season in April.

Latest
figures from pay analyst Industrial Relations Services show that awards rose
0.2 percentage points to stand at 3.2 per cent in the three months ending in
October.

The rise
was set off by higher inflation during the summer months when the all-item
retail prices index recorded a 3 per cent rate. But inflation is forecast to
fall next year.

Jeremy
Bough, the report’s author, said, “An inflation rate of 3 per cent plus during
the remainder of this year means that the recent pick-up in pay deals could be
sustained over the coming months and set the scene for the crucial new year
wage round when a quarter of all settlements are due to be concluded.

“But
falling inflation over the first half of next year, the impact of the high
pound and the demands of consumers for lower prices means there is little
prospect of any sustained and decisive take-off in pay awards in the year
ahead.”

Most of the
rise came in private sector wages that account for three-quarters of the 41 pay
reviews analysed.

The T&G
union said it was logging pay awards of 2 to 3.9 per cent over the same quarter
but expected the levels to fall.

By Kathy
Watson

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