So let's look at some figures:

Inflation

• The CPI inflation rate increased to 1.5% in November
• The RPI inflation rate increased to 3.4% in November
• National Statistics Online confirm that UK inflation is the lowest in the EU since 2000

Pay Growth

• National Statistics Online report that pay growth is at the highest level since March 2002, with average earnings (including bonuses) rising by 4.1% in the year to October 2004
• Breaking this down, in the private sector, pay growth (including bonuses) was 3.9% and in the public sector was 4.6%
• As an example IRS report a rise in manufacturing pay awards averaging 3.1% and IT workers saw a 2.9% pay rise, although this was significantly varied throughout the sector

Pay settlements for the year ahead look set to remain at the 3 per cent level according to new figures compiled by IRS. However, the survey indicates that employers are under pressure to increase settlements above this level to keep up with inflation, which may be the case in the first few months of 2005 and certainly negotiators will be keeping this in mind.

The Financial Times and Independent have reported that some workers in the first few pay deals of 2005 have been awarded settlements worth 4%.

For further discussion or advice on pay, negotiation or other employee relations issues important to your business, please contact Mark Shortell on 01743 245 564 or email mark@hradvantage.co.uk

Sources: IRS, IDS, Financial Times, Independent, Personnel Today, National Statistics Online

January 2005