Service sector pay awards fall: CBI survey

Pay awards in the service sector have crept down to their lowest level for nine years, according to the latest survey of pay settlements published today by the CBI.

The survey shows service sector pay settlements averaged 2.8% in the three months to April 2003, while they stood at 3.1% in January and 3.2% in April last year. This is the lowest level since March 1994, according to the CBI.

The manufacturing sector, where settlements have been weak for some time, saw a slight rise during the three months to April. The average of 3% compares with 2.8% in January and 2.7% in April last year.

Service sector awards are now lower than manufacturing awards for the first time in six years, albeit with only a slender 0.2% difference between them, the report concluded.

Ian McCafferty, CBI Chief Economic Advisor, said: "It is clear that pay pressures are not a threat to inflation and are therefore no barrier to an interest cut.

"The service sector has been through a difficult period. Retailers are seeing an underlying slowdown in sales while financial services and tourism are still suffering from low profits. All of this has pushed awards slowly down to the levels seen in manufacturing.

"Manufacturing remains under pressure. Firms may be indicating that pay awards have edged upwards from the lows of last autumn, but we are a long way from a significant rise in the overall trend."

The survey analysed some 1,400 private sector settlements/awards for 1.6 million employees.


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