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Market Analysis

UK Pay Settlements Steady at 4.9% in Three Months to June
Amos Simanungkalit · 4.5K Views

11

 

British employers offered average annual pay settlements of 4.9% in the three months leading up to June, consistent with the previous month's figures, according to industry data. This underscores ongoing strong wage growth that could continue to fuel the Bank of England's inflation concerns.

Brightmine, which compiled this data from 145 pay settlements covering 370,000 employees, anticipates a slowdown in pay growth due to lower inflation compared to last year. However, the slowdown may be less pronounced than previously expected, as Britain's new Labour government plans to account for higher living costs and equalize the minimum hourly wage for younger workers with those aged 23 and over.

"The government typically announces increases to the national minimum wage rates in November each year. Organizations with employees paid these rates can begin to model the potential impact of the proposed changes, especially if the elimination of age-based adult rates is confirmed," said Sheila Attwood, Brightmine's senior content manager.

Significant increases in the minimum wage, including a 9.8% rise in April aimed at reaching the former Conservative government's goal of lifting it to two-thirds of median earnings, have already markedly influenced average pay.

Brightmine noted that if pay settlements linked to the higher minimum wage were excluded, the median pay settlement in the most recent quarter would have been 0.6 percentage points lower.

Next week, the Bank of England is set to release new inflation forecasts. However, investors have tempered their expectations of an interest rate cut from its 16-year high after recent official data showed continued high wage growth and services price inflation.

Official statistics revealed that average weekly earnings in the three months to June were 5.7% higher than the previous year, nearly double the increase most Bank of England policymakers deem compatible with maintaining consumer price inflation at its 2% target.

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.

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