Private sector pay rises at 3%

Updated: 
Coins and notesMedian pay rises in private firms have remained at 3% in recent months, just above the figure for the whole economy, according to research.

A study of 131 settlements in the quarter to May, covering more than 2.3 million workers, showed that half were at or above this level.

Pay analysts IDS said the median settlement for the whole economy has continued to slip back, and now stands at 2.5%, compared with 2.8% in the three months to April, mainly because of continuing wage freezes in the public and voluntary sectors.

Ken Mulkearn, editor of IDS's pay report, said: "The recent sharp fall in RPI inflation, from 3.5% to 3.1%, reduces the gap between median pay awards in the private sector and the generally accepted measure of the cost of living to just 0.1%.

"If private sector pay settlements remain at current levels, and inflation falls further, then the squeeze on workers' incomes, which began in 2008, will have been loosened significantly, but public sector workers will continue to feel the effects of extremely tight pay restraint."