U.K. Wage Bargainers Clinch Bigger Pay Increases, Survey Shows

By Jennifer Ryan

June 27 (Bloomberg) -- U.K. wage negotiators won bigger pay increases in the three months through May compared with a year earlier to compensate for a higher cost of living, a survey by Industrial Relations Services showed.

Pay bargainers agreed to increases of a median 3.3 percent, up from 3.2 percent in the three months through April and 3 percent in the same period a year earlier, the London-based researcher said in a statement today. The result is based on 188 wage deals affecting 707,606 employees.

Bank of England policy makers told lawmakers yesterday that they are watching pay settlements to gauge whether faster inflation is getting squeezed out of the economy as growth slows. The consumer price index climbed to 3.3 percent in May, the highest since at least 1997. Retail price inflation, used in wage deals, reached 4.4 percent, the most since November.

``While employees continue to look for pay deals to match RPI inflation, employers are finding their ability to pay constrained,'' Sheila Attwood, editor of IRS Pay and Benefits, said in the statement.

Central bank policy makers said yesterday in Parliament that they're focused on bringing consumer-price inflation back to the 2 percent target after it quickened on higher food and energy costs.

``What matters to the economy is what settlements are made for pay and prices,'' Bank of England Deputy Governor John Gieve said yesterday. ``When workers are worried about employment prospects they press less hard for pay increases if they think that will put their employers in more difficulties.''

To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net