Pay data eases inflation fears

PAY SETTLEMENTS have edged lower, according to the latest survey figures, adding weight to employers' argument that there is little inflationary danger on the horizon.

Many more pay deals are below 3 per cent compared with earlier in the year, although very few have fallen below 2.5 per cent, according to researchers Incomes Data Services.

One of the deals above 3 per cent, however, was a merit-linked award of 3.65 per cent on average to staff in the Treasury. All "satisfactory" staff got a minimum pay rise of pounds 375. The deal also improved paid maternity leave for Treasury civil servants.

The survey indicated that few pay deals go below a floor of 2.5 per cent, even though headline inflation has now fallen to 1.3 per cent and is likely to decline further. In addition, settlements continue to be spread across a wide range, with six deals out of 111 recorded above 5 per cent.

One of the highest was a 7.03 per cent pay rise at Ford Credit's call centre in St Albans. At the other end of the range was a 2 per cent deal at Northern Electric Supply in Gateshead. Bang in the middle were the BBC, where most staff got 2.6 per cent, and Tesco, where employees got a 2.7 per cent rise.

Even so, the average level has drifted lower over the course of this year despite the fact that the jobs market has continued to tighten. This is particularly true in southern England. Unemployment rates have dropped to 2 per cent or lower in a number of thriving towns such as Cambridge, Crawley, Stevenage and Swindon.

The report concludes: "Although inflation is very low, earnings are growing at an average of 2.8 per cent, well above the rate of increase in the cost of living."

IDS Report, August 1999, pounds 30. Contact 0171-250 3434.