Public sector drives UK pay awards higher in October

Pay awards from British employers rose in the three months to October thanks to rising public sector salaries but private sector pay deals – which are closely watched by the Bank of England – were stable, a survey showed on Tuesday.

Median basic pay deals in the three months to the end of October rose to 6 per cent from 5.5 per cent in the previous quarter, matching the series’ all-time high, human resources publication and data provider XpertHR said.

In the public sector, median pay deals rose to 6.5 per cent compared with 4 per cent a year ago, marking the highest such reading since 1991 and above the private sector median of 6 per cent.

The BoE is unlikely to worry much over the rise in public pay deals since it focuses more on wages in the private sector, which are more susceptible to changes in monetary policy.

A Chartered Institute of Personnel and Development (CIPD) survey last week also showed strong public sector pay intentions, albeit after years of real-terms pay cuts in many occupations.

The XpertHR figures for October were based on 26 pay deals, a much smaller number than average.

Official data last week showed a slowdown in average weekly earnings growth during the three months to September which BoE officials have welcomed although they have also said it remains too high.