Pay growth slows again even as public sector awards hit record annual levels
Pay rises increased at the slowest pace since the end of last year in the three months to August, a positive sign for the Bank of England as it considers its next interest rate decision.
According to HR analytics firm XpertHR, in the three months to August, pay awards climbed at five per cent. This was down from 5.4 per cent in the three months to July.
“This month’s data reinforces the XpertHR view that we have reached the peak of higher pay awards, and for the remainder of the year we can expect settlements and increases in pay to slowly begin to fall,” Sheila Attwood, XpertHR senior content manager, said.
The news will be welcomed by the Bank of England, who are set to make their latest interest rate decision tomorrow. Rate-setters at the Bank have highlighted developments in the labour market as crucial for the future path of interest rates, suggesting it is a good indicator of how persistent inflation is.
Wages tend to rise after inflation heats up as workers respond to higher prices by demanding better pay to compensate for their loss of spending power. Official figures out earlier this month showed that wage growth averaged 7.8 per cent between May and July.
Although this was extremely high, rising unemployment has raised hopes that levels of pay growth will begin to ease in the coming months.
The data also showed that on an annual basis, public sector pay awards hit their highest level in 30 years. On average, public sector employees are receiving 6.4 per cent more than last year.
This year the government has been locked in a series of disputes with different parts of the public sector, many of which have won their first meaningful pay increases for years.
Teachers were offered a 6.5 per cent pay rise earlier this year while junior doctors and consultants were offered a six per cent increase. A number of other sectors were also given hefty pay packages.