Pay deals remain steady at 2.5%

Median pay awards have held steady at 2.5% in recent months, although below the rate of inflation, with the public sector figure just 1%, according to a new study.

Research among 177 pay deals, covering 2.2 million workers, by analysts IDS, found higher awards in manufacturing firms, at 2.8%, just below the current CPI inflation rate of 2.9%.

In comparison, median pay deals in the public sector were just 1% in the three months to June.

Half of pay rises this year have been between 2% and 2.9%, rising to over 3% in energy, water, vehicles and components sectors.

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The “comparatively” low rise in the minimum wage from October – up by 12p an hour to £6.31 – may have a bearing on future settlements in sectors such as private services, said the report.

Ken Mulkearn of IDS said: “Our latest figures indicate signs of a recovery in manufacturing, as pay rises here continue to settle ahead of those in private services in the second quarter of the year.

“So far, pay increases in private services appear unaffected by slightly higher rates of inflation, but whether this gap can be bridged depends on the economic recovery in the months ahead.”

The headline figures are slightly higher than those released by XpertHR, which found that in the same three-month period the median base wage rose by two per cent across the private and public sector.