Relief for hard-pressed workers as gap between pay rises and inflation narrows to just 0.7%

| August 24, 2012 | 0 Comments

By
Rachel Rickard Straus

01:21 EST, 24 August 2012


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01:49 EST, 24 August 2012

The gap between pay rises and inflation has narrowed to its lowest level since December 2009, slightly easing the strain on hard-pressed households.

Private sector pay awards in the three months to the end of July were 2.5 per cent, just 0.7 percentage points below July inflation, according to pay information firm XpertHR.

This is a slight improvement on the two per cent average pay rise seen in the previous quarter.

Relief: Private sector pay awards were just 0.7 per cent below inflation in July

Relief: Private sector pay awards were just 0.7 per cent below inflation in July

However, XpertHR said the headline figure had lifted because there were few public sector deals in the quarter.

July’s retail prices index inflation rose unexpectedly to 3.2 per cent, following a swift decline since its peak in of 5.2 per cent in September.

Rising oil and petrol prices were behind the reversal, said the Office for National Statistics – with transport, and particularly air fares, the largest contributor to the average rate since July last year.

One in six of the 83 settlements studied involved a pay freeze, while around one in eight were worth 4 per cent or more.

After pay freezes, the most common basic pay award was three per cent, the outcome in 17.2 per cent of basic pay settlements.

Sheila Attwood of XpertHR said: ‘Although private sector pay settlements are holding steady at a median of 2.5 per cent, there is little evidence of upward pressure, with two-thirds of awards in the matched sample worth the same as, or less than, the award in the previous year.

‘Even outside the public sector, we are still seeing one settlement in six resulting in a pay freeze.’

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