Warning over pay increases

An upturn in inflation to 2.7 per cent and forecasts of still higher figures is expected to drive up the level of pay increases this year. In a study published today, Incomes Data Services observes that wage negotiators are coming under increasing pressure.

The research group points out that City predictions just before Christmas forecast the Retail Price Index at between 2.8 and 3.1 per cent in the first quarter and around 3.5 per cent in the second half of the year, or even 4 per cent under some circumstances.

The first few settlements of 1997 have seen awards of 3 to 4 per cent, but recent weeks have seen disputes over parity requiring substantial increases to secure settlements.