UK pay rises reach 15-year record

Average pay rises in the UK reached their highest level in 15 years in the final quarter of 2007, a survey says.
The main reason behind the increase was pay rises being linked to quickening inflation, said the report by Industrial Relations Services (IRS).

Pay deals rose 3.7% in the October to December period yearonyear, as against 3.4% for September to November.

But the IRS added that figures for early January showed pay rises were unlikely to remain as high.

Inflation

Sheila Attwood, of the IRS said: "Looking back through the IRS archive, pay awards have not stood at this level [in the last quarter of 2007] since November 1992, when settlements were also buoyed up by notably high levels of retail prices index inflation."

Analyst Howard Archer said it was likely the data would make the Bank of England reluctant to reduce interest rates further.

"One of the Bank of England’s main inflationary concerns is that higher inflation in the short term, resulting from increasing utility bills and elevated food prices, could raise inflationary expectations and lead to higher pay settlements," said Mr Archer.

But he said that looking ahead, it was likely that pay would be "largely contained".

Private sector pay increased by 3.5% during the period, beating the public sector, which saw a climb of 2.5%

The poll examined more than 18,000 workers’ pay settlements and looked at the middle value, to find the median pay rise.

Original source : BBC News Online