MNI: BOE Agents Survey Shows Pay Settlements Rising In 2018

--BOE Agents Finds Average Pay Deals Expected In 2018 3.1% Vs 2.6% In 2017

By David Robinson

     LONDON (MNI) - UK pay settlements this year are expected to be markedly

higher than in 2017, a Bank of England agents' survey of employers found.

     Employers average expected pay deal over the next 12 months was 3.1%

compared with 2.6% in 2017, the survey showed. 

     The BOE Inflation Report projections, showing inflation holding above the

2.0% target throughout the forecast period, assumed that pay growth would

pick-up and the agents' survey data support this view.

     The agents' survey of 368 businesses, covering 845,000 employees, found

widespread anticipation of higher pay increases this year. Only construction

sector pay rises were predicted to be no higher than in 2017.

     The survey also found employers reporting once again reporting widespread

skill shortages. 

     The BOE's February Inflation Report was conditioned on average weekly

earnings rising to 3.0% in 2018 from 2.5% in 2017 and on up to 3.25% in 2019 and

3.5% in 2020.

     With inflation forecast to drift down from 3.0% towards 2.0% over the next

three years, the Bank forecasts point to modest real pay rise of less than 1.5

percentage points throughout the forecast horizon, compared with the 2

percentage point norm in the years before the global financial crisis hit hard

in 2008.

     Employers were asked by the BOE agents to list the factors driving wage

settlements higher.

     Key elements were "staff recruitment and retention, employer pension

contributions, higher consumer price inflation, the NLW (national living wage)

and the availability of foreign workers."

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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