Pay hikes likely as inflation outstrips salary settlements

awards have could be set for a period of growth, having remained at 2.9 per
cent for three months.

to pay analysts Industrial Relations Services (IRS), with interest rate rises
pushing up headline inflation, this could create upward movement in pay
settlements over the coming months.

has also seen:

Inflation outstripping pay awards. For first time since July 2003, the level of
headline inflation (3 per cent in June 2004) is higher than the IRS median pay
settlement (2.9 per cent in the same month).

Pay growth in both the public and private sectors.

  Pay awards in the manufacturing sector
holding steady at 3 per cent in the three months to June, while in the service
sector they remain at 2.8 per cent over the same period.

The tight labour market is continuing to exert upward pressure on wage
settements as the pool of available labour diminishes

IRS figures looked at 188 pay settlements covering 1,166,876 employees.

By Quentin Reade

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