–Dec-Feb Median Pay Deals 2.5% Unchanged Vs Nov-Jan – IDS
–IDS Says High Inflation Fuelling Further Increases In Pay In April
–Most April Pay Deals Seen So Far At 3% Or Above

LONDON (MNI) – Seven out of eight UK pay deals came in at 2% or
above during the December to February quarter and high inflation is
fuelling a new acceleration in pay deals in April, according to figures
from Income Data Services (IDS) released Thursday.

IDS said that two-fifths of deals were at 3% or above in the
Dec-Feb period. The median settlement for the whole economy is 2.5% for
the three months to the end of February.

Preliminary findings on April deals show that pay settlements may
be picking up steam as high inflation continues to have an impact on
real wages. Most of the April deals recorded so far by IDS have set pay
increases at 3% or higher.

RPI inflation, which is typically used as a reference for pay
awards, has now risen to 5.5% in the year to February and forecasts
from City economists show inflation is likely to stay around 5%
until the end of 2011.

The overall median increase of 2.5% for the three months
to the end of February 2011 is unchanged from the revised figure for the
three months to January. The figure for January was revised downwards
from 2.8 per cent as more January deals were recorded.

IDS said that although a few firms continue to freeze pay, this
trend is falling in the private sector, with less than one-in-ten firms
imposing a freeze in the latest analysis.

Private services saw higher pay awards over the Dec-Feb period,
with a median settlement level of 2.9%, compared to a median of
2.5 in manufacturing.

A large number of public sector pay deals are due in April, but
pay freezes are looming for most staff here.

Ken Mulkearn, editor of IDS Pay Report, said: “The figure for the
median pay rise masks a range of outcomes. While some firms are still
paying awards at low levels, higher inflation is exerting upward
pressure on pay. And while employees worry about the gap between their
pay increases and the rising cost-of-living, employers have to consider
the level of pay award necessary to recruit, retain and motivate staff
given factors including inflation and other concerns such as
affordability and profits.”

Several Bank of England Monetary Policy Committee members have
sounded the alarm bell about recent inflation outturns boosting
inflation expectations and causing workers to seek higher pay deals. MPC
hawk Martin Weale has issued a number of warnings about this threat to
inflation in recent weeks, although others, such as David Miles, point
out that pay deals are still likely to lag inflation.

–London Bureau; Tel: 44-20-7862 7492 or email:
ukeditorial@marketnews.com.

[TOPICS: MT$$$$,MABDS$,M$$BE$]