[UK] Pay settlements stay at 4.9% in three months to June

According to industry data, in the three months to June UK employers offered average annual pay settlements of 4.9 per cent, unchanged from the previous month, Yahoo (via Reuters) reports.

Such an indication of continued strong wage growth could potentially sustain the Bank of England's inflation worries.

Brightmine reportedly compiled the data based on 145 pay settlements covering 370,000 employees. It said it expected pay growth to slow due to lower inflation than in 2023.

However, it told Reuters that the slowdown could be less than it had previously expected, as the UK's new Labour government planned to factor in higher living costs and bring the minimum hourly wage for younger workers in line with those aged 23 and over.

Sheila Attwood - Brightmine senior content manager - said, "The government typically announces uplifts to the national minimum wage rates in November each year. Organisations with employees paid these rates can start to model what the proposed changes would mean ... particularly if the removal of the age-based adult rates is confirmed."

Significant minimum wage hikes - including a 9.8 per cent increase in April to meet the former government's target of lifting it to two-thirds of median earnings - have already had a noticeable impact on average pay.

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, according to Brightmine.

This week the Bank of England is expected to publish new inflation forecasts but investors have reportedly scaled back bets that it will also cut interest rates from a 16-year high after official wage growth and services price inflation data earlier this month remained high.

Official data showed average weekly earnings in the three months to June were 5.7 per cent higher than a year earlier. According to Reuters reporting, this is nearly double the increase most Bank of England policymakers view as compatible with consumer price inflation staying at its 2 per cent target.

Source: Yahoo (via Reuters)

(Quote via original reporting)

According to industry data, in the three months to June UK employers offered average annual pay settlements of 4.9 per cent, unchanged from the previous month, Yahoo (via Reuters) reports.

Such an indication of continued strong wage growth could potentially sustain the Bank of England's inflation worries.

Brightmine reportedly compiled the data based on 145 pay settlements covering 370,000 employees. It said it expected pay growth to slow due to lower inflation than in 2023.

However, it told Reuters that the slowdown could be less than it had previously expected, as the UK's new Labour government planned to factor in higher living costs and bring the minimum hourly wage for younger workers in line with those aged 23 and over.

Sheila Attwood - Brightmine senior content manager - said, "The government typically announces uplifts to the national minimum wage rates in November each year. Organisations with employees paid these rates can start to model what the proposed changes would mean ... particularly if the removal of the age-based adult rates is confirmed."

Significant minimum wage hikes - including a 9.8 per cent increase in April to meet the former government's target of lifting it to two-thirds of median earnings - have already had a noticeable impact on average pay.

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, according to Brightmine.

This week the Bank of England is expected to publish new inflation forecasts but investors have reportedly scaled back bets that it will also cut interest rates from a 16-year high after official wage growth and services price inflation data earlier this month remained high.

Official data showed average weekly earnings in the three months to June were 5.7 per cent higher than a year earlier. According to Reuters reporting, this is nearly double the increase most Bank of England policymakers view as compatible with consumer price inflation staying at its 2 per cent target.

Source: Yahoo (via Reuters)

(Quote via original reporting)