By Suban Abdulla
LONDON (Reuters) – British employers agreed pay increases averaging 5.6% in the three months to April, reflecting high consumer price inflation and a hefty rise in the minimum wage, putting further pressure on the Bank of England to keep raising interest rates.
Incomes Data Research (IDR) said the median pay settlement awarded by major British employers had increased to 5.6% in the three months to April, the highest in records dating back to 2005 and up from 5.0% in the three months to the end of March.
Median pay awards for private-sector workers increased to 5.8% in the same period, while public-sector pay awards averaged 5.0%.
Zoe Woolacott, a senior researcher at IDR, said Britain’s labour market remained tight, despite consumer price inflation easing to 8.7% in April.
The IDR’s measure of median pay rises for both the private and public sector had been steadily increasing from an already above-average 4.0% in April last year due to the surge in the cost of living and inflation, Woolacott said.
April is a key month for pay deals between employers and workers, and comes at a time when many public-sector employees are taking industrial action.
The National Living Wage – a minimum wage rate which does not apply to apprentices or staff aged under 23 – rose by 9.7% at the start of April to 10.42 pounds ($13.10) an hour.
“Pay rises in excess of 6% are common across the private sector as inflation remains elevated…. The recent uplift in the National Living Wage has also influenced the rising median,” Woolacott said.
However, the Bank of England, which is expected to raise interest rates to 4.75% next week, is closely monitoring wage growth in the private sector and has said it will keep increasing Bank Rate if inflationary pressure persists.
Some of the biggest pay rises included 12% increases for workers at clothing retailer Primark, and a 9% rise for staff at budget airline Jet2, according to the IDR report.
The pay settlements in the IDR report are broadly in line with those in separate data produced by XpertHR, which showed a median pay rise of 6% in the three months to April.
Fresh labour market data from the Office for National Statistics is due to be published later on Tuesday.
A separate survey from the Chartered Institute of Personnel Development on Tuesday showed British workers were feeling less optimistic about work than in 2019 and considered their jobs to be more “transactional” and just a means to earn money compared with before the COVID-19 pandemic hit.
The IDR analysis was based on 141 pay deals, covering more than 1.5 million employees, which took effect between Feb. 1 and April 30.
($1 = 0.7957 pounds)
(Reporting by Suban Abdulla; editing by David Milliken)
