Pay awards in service sector firms have fallen, confirming that inflation remains firmly under control, the latest CBI pay databank survey shows today (Monday).
Pay awards in service firms averaged 3.7 per cent in the three months to September, compared with 4.1 per cent in the three months to June and 3.9 per cent the same time a year ago.
Manufacturing pay awards edged up slightly, averaging 2.9 per cent in the three months to September compared with 2.7 per cent in the three months to June and 3.1 per cent the same time a year ago.
Ian McCafferty, CBI Chief Economic Adviser, said, “Manufacturing pay awards remain low and are being held back by pressure on prices and the global slowdown. The fall back in service sector pay indicates that the slowdown is spreading to other areas. This data suggests that there is little pressure on inflation and should reassure the Bank of England. “
In service firms, the need to recruit and retain staff was the main reason determining pay awards (42 per cent). This was followed in importance by the cost of living increases (32 per cent).
Forty-one per cent of manufacturers said inability to increase prices was the most important downward pressure on pay settlements, followed by low profits (34 per cent). Cost of living increases were the most important upward pay pressure (30 per cent).
