Summary of the editorial from IDS Pay Report 986, October 2007

Pay and bargaining prospects 2007/08

Private sector pay to rise in a range between 3 and 4.5%

This special issue contains the IDS Pay Report team’s annual assessment of the key items on the reward agenda for the coming year. As well as reviewing developments in pay and conditions so far during 2007, we look forward to 2008. In particular, we present inflation forecasts for the next 15 months. These predict that the RPI is set to remain at around 4 per cent until the start of 2008, and only thereafter to fall, to around 3 per cent by spring. This is mainly because of the ‘upside risks’ associated with prices of commodities such as oil, and also food. At the same time, economic growth is likely to slow somewhat, though many key sectors are expected to continue to perform strongly.

The IDS median pay settlement level responded to the higher inflation environment at the start of 2007, and rose sharply from 3 to 3.5 per cent. It has remained at these levels for most of the year, though with a recent dip at what is one of the quietest times of the year for pay bargaining in the private sector. A key question is how the inflation outlook will affect pay setting throughout the remainder of 2007 and the first few months of 2008. We examine pay developments on a sector-by-sector basis, and we also look at prospects for the labour market, which remains generally strong.

... the full editorial can be read in IDS Pay Report 986