Private sector to see pay rise between 3% and 4.5% in next 12 months

Private sector pay rises are set to soar by almost twice as much as increases in the public sector over the coming year, a survey showed.

Research by Incomes Data Services revealed pay packets for private sector workers are due to increase by between 3% and 4.5% in 2007 but public sector wages are only likely to go up by no more than 2% in the next 12 months.

This was said to be because of Treasury policy for public sector pay rises, which demands they are set at no more than 2%.

The Income Data Services report, published on Monday, also said public sector pay increases would also be curbed by the government’s Pay Gateway committee, which vets all proposals for sharper wage increases.

Ken Mulkearn, editor of the IDS Pay Report, said inflation expectations were the key driver forcing higher pay hikes in the private sector.

Mulkearn said: “Although it is not possible to predict what will happen to pay rises with exact precision, it is still true that the RPI inflation measure is the key to pay setting in the private sector.

“Inflation close to 4% will be a very strong upward pressure on the level of pay settlements.”

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