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23 February 2009

Pay settlement levels holding up despite inflation rate plunge and growing number of wage freezes

Pay settlement levels according to Labour Research Department's (LRD) Payline database of negotiated agreements across the economy shows that the median increase for pay deals in the three months to January 2009 was 3.9%. This is a dip of only 0.1% on the December figure and comparable to the rate in September 2008.

In the 12 months up to and including January 2009 the median increase rate was also 3.9%, showing that pay rises have remained stable across the year despite the rapid plunge in inflation rates according to all measures since a high in September 2008. Inflation according to the Retail Prices Index (RPI) is now only 0.1% and the Consumer Prices Index (CPI) stands at 3%.

The apparent stability in the headline rate changes slightly when the data is broken down. If long-term deals (those in second or subsequent stages of a multi-stage agreement) are excluded, the median rate for newly negotiated deals drops to 3.5% for the three months to January 2009. And the figure for new deals for January only drops to 3.0%. These figures reflect the number of pay freezes that have been recorded since the start of January on Payline.

"The stability of the three-month median increase for pay settlements may suggest that union-negotiated deals are proving more resilient than non-unionised sectors of the economy. However, the underlying trends show that we may see some dropping off of the median in the next couple of months", said Lewis Emery, LRD pay and conditions researcher.

The three-month median figures are published in the February issue of Workplace Report.

For further information about Payline or Workplace Report, contact:
Lewis Emery or Rebecca Johnson (Workplace Report editor).

Notes for Editors

  • Workplace Report is LRD's monthly publication for union reps and negotiators.
  • Labour Research Department is an independent organisation founded in 1912 to produce research on behalf of trade unions and the labour movement. More than 1,800 trade union organisations, including 55 national unions, are affiliated to it, representing more than 99% of TUC membership.
  • Payline is LRD's database of negotiated agreements reported to LRD by unions. It includes around 2,000 agreements with information on pay, terms and conditions and other aspects of the employment contract. A full pay round survey is conducted bi-annually in April and October.
  • Pay settlements are negotiated rises on basic pay, and exclude bonus, increment, overtime and other allowances


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