National Minimum Wage

National Minimum Wage
10
Figure 1.4: Median Pay Settlements and Price Inflation, UK, 2007-2011
Change on a year earlier (per cent)
6
5
4
3
2
1
0
-1
-2
2007 January
2007 May
2007 September
2008 January
2008 May
2008 September
2009 January
2009 May
Month
2009 September
2010 January
2010 May
2010 September
XpertHR IDS LRD EEF RPI
Source: XpertHR (previously Industrial Relations Services), Incomes Data Services (IDS), Labour Research Department (LRD), and
the manufacturers’ organisation (EEF), pay databank records, three-month medians; ONS, annual change in RPI (CZBH), monthly, not
seasonally adjusted, UK, 2007-2011.
Notes:
a. EEF covers manufacturing only.
b. Pay settlement medians for the three months to the end of month shown.
1.24 From late 2009 pay settlement medians failed to keep up with the inflation rate, resulting in
unusually large falls in real pay rates. This divergence continued through 2010. At the time of
our last report, however, researchers suggested that settlements and inflation would move
closer into line as settlements rose slightly and inflation fell. At that time settlement data for
November 2010 showed the different medians in a narrow range of 2.0-2.6 per cent, albeit
with substantial differences between the public and private sectors, and between individual
industries and organisations. Researchers told us that early settlement data for December
2010 did not materially alter this picture, and surveys of employer intentions suggested more
of the same in 2011. However, there was some suggestion in the few January 2011
settlements then available that the private sector median might edge up slightly to 2.5-3.0
per cent, although government pay policy pointed to a median award in the public sector of
near to 0 per cent. At that stage we thought that these median levels of increase were
unlikely to change much, maybe turning out slightly higher to reflect the expected upturn in
the economy.
2011 January
2011 May
2011 September
6
5
4
3
2
1
0
-1
-2