The median pay award is 0.2 percentage points higher than the revised figure for the rolling quarter to the end of June, and takes the median back to the level at which it stood for the first three rolling quarters of the year.



This is a quiet period in the pay bargaining calendar, and deals effective during April, the busiest month in the bargaining year and including many of the public sector pay awards, have dropped out of the analysis. The figures are now dominated by settlements covering large numbers of employees in the construction sector. The Construction Industry Joint Council, covering 500,000 workers, has awarded a 6% increase.

While private sector pay awards for the 12 months to the end of July stand at 3.5%, the figure for the public sector is 2.5% for the same period.

The inflation figures released on 12 August revealed that RPI, the measure favoured by most pay-setters, had risen to 5% in July 2008, up from 4.6%.

As we noted last month (subscription required), pay awards have been below the rate of RPI inflation for more than two years. This pattern continues, and the gap between the median pay award and RPI inflation has widened to stand at 1.5 percentage points.

Although there has been a slight increase in the median pay settlement in the three months to the end of July, rising unemployment (up 60,000 in the quarter to June 2008) and increasing job insecurity mean that there is unlikely to be increased pressure on wages in spite of higher inflation.

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