RMT PAY BULLETIN: May 2016

May 19, 2016

Headline forecasts

Inflation rate: Average new forecast

April 2016 RPI inflation (change in cost of living relative to same time one year earlier) was 1.3%

For the final three months of 2016, annual RPI (according to the latest forecasts) will rise to 2.2%

For the final three months of 2017, annual RPI (according to the latest forecasts) will rise to 2.9%

 

Average earnings growth: Average new forecast

Over the course of 2016, average earnings are predicted to increase by 2.6%

Over the course of 2017, average earnings are predicted to increase by 3.1%

 

Proportion of company turnover paid to Exchequer as tax, is falling

Even companies reliant on public contracts avoid tax. In the year to 30 April 2015, Stagecoach had a turnover of £3.2 billion, but paid just £25.7 million tax. It is unclear how much Stagecoach spends on tax advisers – other firms, such as National Express, admit to sometimes spending £1 million a year.

 

Forecasts in detail: RPI inflation[1]

Predictions for RPI inflation made by a range of forecasters are:

 

Q4 2016

Average forecast (non-City): 2.2%

Average new forecast: 2.2%

Average forecast (City): 2.3%

Highest recent forecast: 3%

Lowest recent forecast: 1.6%

Median recent forecast: 2.1%

 

High RPI Q4 2016 forecasts to quote to employers in pay negotiations are:

Schroders Investment Management (3% – forecast made in May 2016), Nomura (2.8% – forecast made in May 2016), Pantheon (2.6% – forecast made in May 2016), Experian Economics (2.6% – forecast made in May 2016), Commerzbank (2.5% – forecast made in May 2016)

 

Q4 2017

Average forecast (non-City): 2.9%

Average new forecast: 2.9%

Average forecast (City): 2.9%

Highest recent forecast: 3.5%

Lowest recent forecast: 1.8%

Median recent forecast: 3%

 

High RPI Q4 2017 forecasts to quote to employers in pay negotiations are:

NIESR (3.5% – forecast made in May 2016), Pantheon (3.5% – forecast made in May 2016), Economic Perspectives (3.3% – forecast made in May 2016)[2], Bank of America/ Merrill Lynch (3.2% – forecast made in May 2016), Nomura (3.2% – forecast made in May 2016), Experian Economics (3.2% – forecast made in May 2016)

 

Forecasts in detail: Average earnings growth

Predictions for average earnings growth made by a range of forecasters are:

 

2016

Average forecast (non-City): 2.6%

Average new forecast: 2.6%

Average forecast (City): 2.5%

Highest recent forecast: 3.2%

Lowest recent forecast: 1.8%

Median recent forecast: 2.6%

 

High average earnings growth forecasts for 2016 to quote to employers in pay negotiations are:

European Commission (3.3% – forecast made in May 2016)[3], Schroders Investment Management (3.2% – forecast made in May 2016), Liverpool Macro Research (3.2% – forecast made in May 2016), Oxford Economics (3.2% – forecast made in May 2016)

 

2017

Average forecast (non-City): 3.1%

Average new forecast: 3.1%

Average forecast (City): 3.1%

Highest recent forecast: 3.5%

Lowest recent forecast: 2.6%

Median recent forecast: 3.1%

 

High average earnings growth forecasts for 2017 to quote to employers in pay negotiations are:

European Commission (3.5% – forecast made in May 2016)[4], Capital Economics (3.5% – forecast made in May 2016), Economic Perspectives (3.5% – forecast made in May 2016), Pantheon (3.5% – forecast made in May 2016), IHS Global Insight (3.5% – forecast made in May 2016)

Recent RMT Settlements

Company

Award

Effective From

Train Operating Companies and Rail freight
First Great Western
  • Year 2 of two year deal was for a 2% increase or Feb 2016 RPI, whichever was greater. Accordingly pay award was for 2%.
1 May 2016
Serco Caledonian Sleeper·         2.32%1 April 2016
North Yorkshire Moors Railway
  • 1%
1 Jan 2016
Infrastructure Companies
Babcock RailYear One

a)    2% increase on basic rates for all members covered by Procedure Agreement 1 (General Collective Bargaining)

b)    An additional 0.5% on the basic rate for those working as Infrastructure Assistant (IA Grade); Infrastructure Technician (IT Grade); Clerical Officer  Grade 2 (CO2 Grade); Clerical Officer Grade 3 (CO3 Grade); Professional & Technical Grade 1 (Grade PM1 Basic & Steps 1 -6 inclusive) and Apprentice. This will give a total increase of 2.5%

c)     A minimum increase in salary of £500 will be applied where implementation of a) and b) results in salary increase of less than £500.

d)    The levels of meal, lodging disturbance and associated allowances will be increased by 2%

 

Year Two

a)    2.5% increase or Jan 2017 RPI, whichever is greater, on basic rates for all members covered by Procedure Agreement 1 (General Collective Bargaining)

b)    An additional 0.5% on the basic rate for those working as Infrastructure Assistant (IA Grade); Infrastructure Technician (IT Grade); Clerical Officer  Grade 2 (CO2 Grade); Clerical Officer Grade 3 (CO3 Grade); Professional & Technical Grade 1 (Grade PM1 Basic & Steps 1 -6 inclusive) and Apprentice. This will give a total increase of 3%

c)     A minimum increase in salary of £500 will be applied where implementation of a) and b) results in salary of less than £500.

d)    The levels of meal, lodging disturbance and associated allowances will be increased by 2.5%

 

 

4 April 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3 April 2017

Unipart Rail DoncasterYear One

  • 1.9% increase to base pay, effective

 

Year Two

  • 0.5% + CPI (CPI as of Jan 2017, published in Feb 2017) on base rate
 

1 April 2016

 

 

1 April 2017

Volkerrail·         2% on basic rates or £400,

whichever is greater

·         2% to taxable allowances

Colas RailYear One

·         2% increase on all base wages

 

Year Two

·         Increase of Feb RPI + 0.5%,

subject to a minimum increase of 2% and a maximum of 2.5%

 

Year Three

·         Increase of Feb RPI + 0.5%,

subject to a minimum increase of 2% and a maximum of 3.25%

 

1 April 2016

 

 

1 April 2017

 

 

 

 

1 April 2018

Train workshop and maintenance
Voestalpine VAE UK·         2% increase to basic rates of pay for everyone

·         Maintain £400 bonus attendance bonus if Company remains.

·         Increase the employee’s Engagement Bonus from currently £175 to £325

1 April 2016

Cleaning and catering

Carlisle Cleaning Services Ltd (Transpennine Express)
  • Living Wage (level recommended by the Living Wage Foundation) or 3%, whichever is greater
1 April 2016
CarillionYear One

  • 2% or £520 to basic rates,

whichever is greater

 

Year Two

  • Feb RPI +0.5% or £535,

whichever is greater

 

1 April 2015

 

 

 

1 April 2016

Ships and Docks

DFDS
  • 2%

 

1 Jan 2016
Heysham Ports·         2% on basic pay

·         0.5% on basic pay

 

1 Jan 2016

1 June 2016

Harwich International Port·         2% increase on basic pay and variability

  • Changes to the long service awards
1 Jan 2016

 

Serco Ltd (PNTL/ INS)
  • 2%
  • 2%
1 April 2016

1 April 2017

 

Recent non-RMT settlements

Company (Sector)

Award

Effective From

BMW – Mini (Manufacturing)·         3.5%1 Jan 2016
Aldi (Retail)·         3.07% for store assistants outside London1 Feb 2016
Asda – N Ireland (Retail)·         3.9%1 April 2016
Crown Paints (Manufacturing)·         2.625%1 April 2016
Western Power Distribution (Utilities)·         2.5%1 April 2016

 

We use RPI and not other measures of inflation such as CPI or CPIH

RPI, which includes housing costs and excludes high earners’ spending, is the only inflation measure to use for negotiating pay (though referencing average earnings is also recommended for the coming period).

 

RPI is also used to calculate index-linked government bonds, privately issued index-linked bonds, National Savings and Investments, Corporation Tax, Business Rates, Alcohol Duty, Tobacco Duty, Gaming Duty, Air Passenger Duty, Vehicle Excise Duty, Climate Change Levy, car and van Fuel Benefit Charge, regulated rail fares, regulation of water and sewerage charges, indexation of British Telecom’s wholesale charges and interest payments on student loans

 

CPI is designed for comparing different EU countries’ economic performances and not for internal UK purposes. It excludes housing costs (though includes stockbrokers’ fees and foreign students’ university tuition fees), is calculated to a mathematical formula less responsive to price fluctuations and doesn’t adequately reflect changes to ordinary workers’ cost of living: so says the Royal Statistical Society.

 

Any attempt by an employer to link a pay award to CPI or a new variation CPIH must be refused and should be logged with the union’s National Policy Department.

 

Yours sincerely,

Mick Cash

General Secretary

 

[1] The average of forecasts generally suggest a modest rise or fall.

 

While forecasts can be useful in indentifying a plausible trajectory for inflation and average earnings, the data is unreliable.

This is especially the case during periods of heightened volatility – such as now.

 

Accordingly, the main use of forecasts to us is as a negotiation tool with employers

and not as an accurate predictor of future changes to our members’ cost of living.

 

[2] https://www.economicperspectives.co.uk/downloads/HMT201605.pdf

[3] “Growth in compensation of employees is expected to accelerate as the labour market tightens further” http://ec.europa.eu/economy_finance/eu/forecasts/2016_spring/uk_en.pdf

 

[4] Table at end of doc – entry labelled “compensation of employees” – final two columns

http://ec.europa.eu/economy_finance/eu/forecasts/2016_spring/uk_en.pdf

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