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Private sector pay 'to trail inflation' in 2011 | Private sector pay 'to trail inflation' in 2011 |
(about 3 hours later) | |
Private sector pay could rise by more this year than in 2010, but is still likely to trail inflation, research by Incomes Data Services has suggested. | Private sector pay could rise by more this year than in 2010, but is still likely to trail inflation, research by Incomes Data Services has suggested. |
Pay awards were running at 2.2% in November, up from the 2% rises seen in most of the past year, and IDS predicts pay rises may average 3% this year. | Pay awards were running at 2.2% in November, up from the 2% rises seen in most of the past year, and IDS predicts pay rises may average 3% this year. |
However, this is less than half the rate of retail price inflation (RPI). | However, this is less than half the rate of retail price inflation (RPI). |
The public sector in the UK faces pay freezes in most areas as a result of the government's spending cuts. | The public sector in the UK faces pay freezes in most areas as a result of the government's spending cuts. |
While the number of explicit pay freezes has been dropping sharply, IDS expects public sector pay rises to fall from a typical 0.75% increase in 2010. | While the number of explicit pay freezes has been dropping sharply, IDS expects public sector pay rises to fall from a typical 0.75% increase in 2010. |
The latest official figures suggest that RPI inflation - which includes mortgage interest payments and is often used by employers when negotiating pay deals - rose to 4.7% in November from 4.5% the month before. | The latest official figures suggest that RPI inflation - which includes mortgage interest payments and is often used by employers when negotiating pay deals - rose to 4.7% in November from 4.5% the month before. |
Many analysts expect RPI to remain above 4% this year. | Many analysts expect RPI to remain above 4% this year. |
'Triple whammy' | 'Triple whammy' |
The BBC's business editor Robert Peston said that the pressure on pay expected this year followed pay squeezes in the previous two years. | The BBC's business editor Robert Peston said that the pressure on pay expected this year followed pay squeezes in the previous two years. |
"We are talking for many people about a few years of declining take-home pay in real terms," he said. | "We are talking for many people about a few years of declining take-home pay in real terms," he said. |
Ken Mulkearn, editor of the pay report from IDS, said the picture was particularly bleak for public sector workers. | Ken Mulkearn, editor of the pay report from IDS, said the picture was particularly bleak for public sector workers. |
They could face a "triple whammy of low pay rises or pay freezes, compared to high inflation and increased contributions to pension schemes", he told the BBC. | They could face a "triple whammy of low pay rises or pay freezes, compared to high inflation and increased contributions to pension schemes", he told the BBC. |
Earlier research from IDS showed that for the year to October the total earnings of FTSE 100 directors rose by 55%, although Mr Mulkearn pointed out that this included bonuses, share options and other long-term incentives in addition to salary. | Earlier research from IDS showed that for the year to October the total earnings of FTSE 100 directors rose by 55%, although Mr Mulkearn pointed out that this included bonuses, share options and other long-term incentives in addition to salary. |
"It's quite a contrast between largesse on the one hand and a squeeze on living standards on the other," Mr Mulkearn said. | "It's quite a contrast between largesse on the one hand and a squeeze on living standards on the other," Mr Mulkearn said. |
Such large rises in earnings for senior executives are both damaging and divisive, said Brendan Barber, general secretary of the TUC. | Such large rises in earnings for senior executives are both damaging and divisive, said Brendan Barber, general secretary of the TUC. |
"What we've seen, over quite a long period now, is levels of increases being secured by the top corporate leaders that are simply not justified in any way by performance - and are out of all proportion to what's been happening to the rest of the workforce," he said. | "What we've seen, over quite a long period now, is levels of increases being secured by the top corporate leaders that are simply not justified in any way by performance - and are out of all proportion to what's been happening to the rest of the workforce," he said. |
"And that is a recipe for desperately low morale, when ordinary workers see themselves being held back so severely while the leaders of their organisations are rewarding themselves so handsomely." | "And that is a recipe for desperately low morale, when ordinary workers see themselves being held back so severely while the leaders of their organisations are rewarding themselves so handsomely." |
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