–Report Finds Some Evidence ‘Wage Creep’
–Says No Sign High CPI Fueling Marked Wage Acceleration
–Median Pay Deal Unchanged At 2.0%
–Proportion Of Deals In 2% to 3% Range Rises

LONDON (MNI) – Median UK pay deals held steady at 2% in the three
months through August but a growing proportion of private sector deals
are in the 2% to 3% range, according to the last survey by pay experts
Incomes Data Services.

With public sector pay freezes now the norm, there is a widening
gap between private and public sector pay growth. IDS found private
sector pay freezes are becoming a rarity.

The survey suggests that while there is some evidence of what Bank
of England agents term “wage creep” in the private sector, high
inflation outturns are not feeding through into any marked acceleration
in overall wage growth.

In the IDSPay.co.uk surveys the median pay award has tended to hold
steady around the 2.0% level since the onset of the financial/economic
crisis from Q3 2007. The survey median was 1.9% back in January, and
since then there has been evidence of a, at most, gentle rise.

“Our latest figures show that as the economy has slowly recovered,
there has been a general defrosting of pay and benefits across much of
the private sector,” Ken Mulkearn, editor of IDS Pay Report, said.

Mulkearn said while higher inflation has played a role in the
“defrosting” of pay and benefits, the counterweight to this has been the
question of affordability.

“Affordability still weighs heavily in the balance and has kept
most awards below the RPI,” he said.

The IDS survey found some above 3% pay deals in private services
and manufacturing, with just over half in the 2% to 3% range. The public
sector median, however, has fallen to zero as the wide ranging pay
freeze kicks in.

Members of the Bank of England’s Monetary Policy Committee have
highlighted the subdued nature of pay growth in the UK, while noting
the risk of a pass through into pay from higher inflation.

In a speech this week, MPC member Adam Posen noted impending public
sector job cuts and the public sector pay freeze, with private sector
pay wage settlements running around 2%, adding that, in such
circumstances, an ‘inflationary wage spiral’ seemed improbable.

–London Bureau; Tel: 44-20-7862 7491 or email:
ukeditorial@marketnews.com.

[TOPICS: MT$$$$,MABDS$,M$$BE$]