Private sector sees higher pay rewards

The pace of pay increases in the private sector continued to rise at the beginning of this year, although it remains below the level of inflation in the wider economy, while public sector pay remained broadly frozen, according to a new survey.

The median private sector pay award between February and April was 3 per cent, against the 5.2 per cent annual rate of inflation based on the retail prices index, the measure typically used to benchmark pay reviews. The public sector lagged behind, with the median pay reward standing at zero, according to the analysis of pay settlements from Income Data Services (IDS).

As a result, the median for the economy as a whole stood at 2.5 per cent. "The whole economy median obscures a wider reality and clear differences between the public and private sectors," the editor of the IDS pay report, Ken Mulkearn, said. "The latest figures show that private sector pay awards are where we thought they would be this time of year, reflecting a degree of recovery in profitability and higher levels of inflation.

"However, the picture for 2011 is not yet complete and the outlook is difficult to asses."