Pay settlements remain above 3% inflation rate

Pay settlements are remaining above the level of inflation despite a fall in wage deals during the year, according to a survey published today by Income Data Services, writes Martin Whitfield.

It shows the majority of recent deals to be more than 4 per cent compared with the latest inflation figure of 3 per cent. Similar figures are expected to be relased by the CBI tomorrow although the trend is firmly downwards. Growing numbers of settlements are being reported at between 3 and 4 per cent.

January is a busy month for private sector agreements and some companies are locked in to higher settlements as the second stage of long-term deals. Gallaher, the cigarette manufacturer, is to pay 4.1 per cent from 1 January, employees of Crown Wallcoverings are to get 5 per cent and 7,000 thermal insulation engineers 5.9 per cent.

The Government's decision to introduce a 1.5 per cent public sector pay limit should bring down the average later next year as public settlements have matched the private sector.