Pay gap wider despite lower inflation

With pay settlements according to the LRD Payline database of collective agreements still averaging 2.5% in the three months to October and the Retail Prices Index (RPI) rising by 5.4% in the year to October, pay is still lagging well behind inflation.

The median (mid-point) for increases in lowest basic pay was unchanged in the three months to October from the previous period.There was some variation between sectors with the private sector median being 2.6% but the public sector only 1.7%; manufacturing had a median increase of 2.5% but services only 2.2%.

For the year to October the median increase was 3.0%, but when weighted by numbers of workers covered it fell to just 1.3%, reflecting the large numbers of public sector workers subject to the government’s pay freeze.

Annual inflation has fallen slightly across all measures. While the all-items RPI fell to 5.4% from 5.6% the previous month, the RPI excluding mortgage interest payments (RPIX) fell to 5.6% from 5.7%. The government’s preferred measure of inflation, the Consumer Prices Index (CPI), fell to 5.0% from 5.2% the previous month.

The latest government statistics on earnings, the Average Weekly Earnings figures, have been revised, indicating a lower rate of growth over the last four months. Total earnings including bonus payments rose by 2.3% over the three months to September. Excluding bonus payments, earnings grew by just 1.7%, suggesting that the gap between pay and price inflation is growing.