GUEST BLOG POST FROM RICHARD LYNCH ON PAY AND INFLATION

Pay is still not catching up with inflation

Pay settlements have been improving in some parts of the private sector of late but pay freezes abound in the public sector and the gap between pay and prices is getting wider. The latest median pay settlement figures from the main research organisations, for the three months to end September 2011 (with end August figures in brackets), are as follows:

Income Data Services (IDS) – 2.4% (2.5%)

Labour Research Department (LRD) – 2.5% (2.5%)

XpertHR (previously IRS) – 2.0% (2.0%)

The latest Office for National Statistics figures, for the three months to end August (with end July figures in brackets), show:

Average total pay (including bonuses) – 2.8% (2.8%)

Average regular pay (excluding bonuses) – 1.8% (2.1%)

According to the ONS, average total pay in August was £463 a week and average regular pay was £435 a week. According to LRD, average full-time pay was £618 a week in September.

All of the research organisations are suggesting that pay is beginning to look up in parts of the private sector, with IDS reporting that median settlements in manufacturing are now 3%. However, there is also general agreement that that settlements in retail and services are disappointing, with IDS putting them at 2.4% and LRD at 2.2%. There is general agreement as well on the fact that there is virtually no pay movement in the public sector and that the gap between pay increases and inflation increases is now wider than ever.

The pay settlement figures quoted above average out at 2.3% and RPI inflation is 5.6%, giving a gap of 3.3%. And even if the 5.2% figure for the CPI (the cut pay index) is used, the gap is still 2.9%. That’s the extent by which real pay is falling today, while pay for the directors of major companies is rising by 49% a year. Time for a change, I think!

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.

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