Pay settlements are therefore at the same level as CPI inflation (3.3% in May 2008) but one percentage point below the level of RPI inflation (4.3% in May 2008) (subscription required for each inflation link).

Pay settlements have now stood firmly below RPI inflation for two whole years. Last month (subscription required), pay awards fell behind the level of CPI inflation for the first time since the IRS record of pay settlements began in 1984, but are now back as equal to the rise in prices as measured by the CPI.

Just 9% of pay awards in the three months to the end of May 2008 are worth the same or more than RPI inflation, while 48% paid the same or more than CPI inflation.

In a speech last week (external website), chancellor Alistair Darling asserted that "continued restraint on pay is required from both the public and private sector". In Darling's estimation: "to return now to inflationary pay settlements would undermine rather than raise people's living standards with a damaging circle of wage increases eroded by steadily rising prices."

Our data suggest that there is little immediate risk of Darling's fears becoming reality.

The current economic slowdown has resulted in a changing balance of power in the pay bargaining environment. While employees continue to look for pay deals to match RPI inflation, employers are finding their ability to pay constrained.

With below-inflation pay awards now a reality for the majority of workers in both the public and private sectors, it would seem that employers have gained the upper hand in pay negotiations.

• If your organisation has recently settled its annual pay award, and you would like to contribute to our monthly analysis of pay trends, you can submit details of your organisation's latest settlement for inclusion in the IRS pay databank by completing the online form.