More heavily unionised, private sector companies are surpassing the public sector in terms of pay deals.
While government policy on pay has kept increases below 3% across most of the public sector, the Income Data Services’ latest Pay Databank showed that the upper quartile of pay deals rose to 4.2% for the last three months to the end of June 2007. Over a third of pay deals in that period are at 4% or above, and just below a quarter of deals are at or above the current level of Retail Price Index (RPI) inflation, which is 4.3% in the year to May.
The report also revealed that many higher level increases are in the electricity and gas sector, while the highest increase that IDS has recorded in in the manufacturing and production sector is the 7.9% paid to some 600 employees at Drax Power in the first of a two-year deal, this was based on the January RPI plus 3.7%.
In the manufacturing and production sector, the median settlement level has risen to 3.9%, up from 3.73% in the three months to May. Companies in this sector were able to pay above-average wage increases.
Ken Mulkearn, editor of IDS PayReport, said: “As ever, firms are having to find a balance between the high cost of living and affordability, but for many larger companies, particularly in energy, parts of manufacturing and on the railways, higher profits have meant they are able to afford pay rises that match inflation. The contrast with the situation in the public sector couldn’t be more marked.”