Pay rises in the public sector are running below those in private business in the first part of this year, according to the latest analysis from Incomes Data Services. Its study shows a change in the pattern that has prevailed in previous years. The research shows that over the past two years, pay increases for public sector staff were largely ahead of those in the private sector but that recent settlements mean that the relationship is currently being reversed.Most private sector increases in the first months of this year have been in the 3 to 3.5 per cent range. The dozen or so public sector rises have been between 2.5 and 3.3 per cent. Overall the median increase for the first quarter of 2004 is 3.2 per cent, up slightly on the 3 per cent figure in the final quarter of last year.

Incomes Data Services says with Treasury policy being to seek lower public sector pay increases this year, most of the increases set so far for April 2004 are lower than last year’s. It highlights the 2.5 per cent increase for teachers, the 2.4 per settlement for prison staff and the 2.8 per cent rises to be paid to members of the armed forces.

Meanwhile, it shows increases in the private sector have risen slightly, with the majority ahead of the inflation rate of 2.6 per cent. IDS has found there is no sign of negotiators taking much notice of the Chancellor’s new inflation measure, the CPI, which currently stands at 1.4 per cent. The analysts say greater economic buoyancy and confidence seem to be feeding through into private sector settlements. There are fewer pay freezes and a larger proportion of deals are in the 4 to 6 per cent range.