Pay settlements set to continue moderate increase

modest rate of increase seen in recent pay settlements is unlikely to change in
the coming months, according to independent analysts Industrial Relations
Services (IRS).

median basic pay settlement across the whole economy increased marginally to
stand at 2.8 per cent in the three months to August. This represents a small
increase of just 0.1 percentage points on the July figure, but it is the
highest level settlements have reached since December 2001.

predicts that pay deals are unlikely to return to the 3 per cent benchmark in
the near future.

findings include:

Public sector stays ahead of private companies – in the 12 months to the end of
August 2002, the median public sector wage settlement was worth 3.4 per cent,
0.9 percentage points above the 2.5 per cent paid to private sector employees.
If the inflation-busting April review body deals are used as a benchmark for
the public sector deals due in July and August, the gap between public and
private pay settlements is likely to widen.

Manufacturing overtakes services. Manufacturing pay awards have been running
behind those in the private sector for several months of this year. But
according to the latest IRS analysis, settlements in manufacturing companies
are pitched at 2.8 per cent in the three months to the end of August 2002,
compared to 2.7 per cent in the service sector.

Pay and Benefits Bulletin acting editor
, Sheila Davie, said: “The gradual
upward trend in the level of wage settlements fits our earlier prediction that
rising inflation and economic recovery in the latter part of the year may
subsequently feed through into a slight upturn in pay awards.  But while inflation has improved from the 1 per
cent low recorded in June, the expected economic recovery has not
materialised.  As a result, pay
settlements will remain subdued over the next few months.”

By Ben Willmott

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