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PRESSURE ON PUBLIC SECTOR PAY CLAIMS

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Private sector pay settlements in the three months to June 2006 are bunched around 3 per cent. The median is 3 per ...
Private sector pay settlements in the three months to June 2006 are bunched around 3 per cent. The median is 3 per cent and the interquartile range, within which half of all increases are set, is 2.5 to 3.3 per cent. The IDS Pay Report analysis finds that private sector pay increases in the second quarter of 2006 are well ahead of the public sector. Most large groups in the public sector received April increases of around 2 to 2.5 per cent, with the exception of local government where increases are worth 2.95 per cent.

The vast majority of the pay increases in the second quarter were set before the announcement that RPI inflation had reached 3 per cent in May (announced mid-June). IDS's latest poll of City forecasts for RPI inflation (see page 2 of IDS Pay Report 956) shows the rate may well stay at 3 per cent for the rest of 2006.

Sarah Miller, editor of the IDS Pay Report said: 'Normally the RPI inflation rate is the starting point for private sector pay bargaining and often sets the lower quartile for pay increases. The recent median pay increase of 3 per cent reflected inflation at 2.5 per cent. With the inflation rate set to be at 3 per cent for the rest of the year the median pay increase in the private sector may well rise to 3.3 or 3.5 per cent in coming months.'

Continued pressure from the government to push down public sector pay increases to 2.25 per cent will thus be made more difficult. A number of recommended pay settlements have now been delayed by referral to the government's new 'gateway' committee which is charged with vetting all significant public sector pay awards this year. As the civil service pay round gets underway, this year could see some very protracted public sector pay bargaining.

The latest pay analysis from the IDS Pay Databank is in issue 956 of the IDS Pay Report. Important new deals analysed include the 3.5 per cent increase paid from June under the first year of a new three-year deal covering 600,000 manual workers in the construction industry. A separate article in this issue reviews all construction pay increases this year and finds most are between 3.5 to 4.5 per cent, as the sector continues to experience strong growth and skills shortages.

The pay settlement analysis appears on pages 7 to 9 of IDS Pay Report 956, the inflation forecasts are on page 2 and the analysis of pay in construction is on pages 13 to 17. PDFs are attached of these three articles.

Pay settlement analysis

Inflation forecasts

Analysis of pay in construction

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