Pay awards in the three months to the end of April 2008 have fallen back to 3.2% from the steady 3.5% seen in each of the three previous rolling quarters.
According to the latest IRS analysis (subscription required) of basic pay settlements, the median basic pay award is now at its lowest level since November 2007.
In addition, basic pay awards have stood below the level of retail prices index (RPI) inflation since May 2006. RPI currently stands at 4.2% in April 2008, meaning that pay rises are one percentage point lower than the rate of increase in prices.
There are signs that pay negotiations concluded in the second half of the year will result in pay rises worth less than a year ago. In the three months to the end of March 2008, 48.3% of pay awards were worth more than in the previous year. In the three months to the end of April 2008, this falls to just 36.1%.
Other evidence points to the level of pay settlements falling over the coming months. RPI inflation is forecast (subscription required) to slow as the year progresses, ending 2008 in the region of 2.8%. In addition, economists expect unemployment to start to increase, and for employers to feel the effects of the economic slowdown.