Pay deals could spike upwards, say analysts

The average level of wage deals is running below the level of inflation, according to a report published yesterday. UK pay settlements averaged 3 per cent in the three months to June, Industrial Relations Services said. But it warned that they looked set to nudge higher in coming months

The average level of wage deals is running below the level of inflation, according to a report published yesterday. UK pay settlements averaged 3 per cent in the three months to June, Industrial Relations Services said. But it warned that they looked set to nudge higher in coming months

IRS, an independent pay analyst, said June's figure was unchanged from the previous two months and up from 2.5 per cent in March. It said a recent rise in headline inflation suggested pay settlements would increase marginally in coming months. "Since the last monthly review, the key thing is that inflation has crept up for the ninth month running," said Jeremy Baugh, editor of the IRS "Pay and Benefits Bulletin".

"Inflation is now above the level of pay awards ... so the prospect is that settlements will nudge above 3 per cent."

Headline UK inflation rose to 3.3 per cent in June, up from 3.1 per cent in May and up from a 36-year low of 1.1 per cent last September. Mr Baugh said he anticipated only a slight rise in settlements, probably to no more than 3.5 per cent. "If inflation rockets then yes, settlements are in danger of following suit but I don't see any immediate prospect of a sharp rise in settlements," he said.