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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.
By Mike Broad
