Circular No. NP/352/13 18th December 2013
TO: ALL BRANCHES, REGIONAL COUNCILS,
REGIONAL OFFICES, COUNCIL OF EXECUTIVES & HO OFFICERS.
Dear Members,
RMT PAY BULLETIN: December 2013
Inflation to date
The Retail Price Index (RPI) is the only inflation measure to use for negotiating pay. (It is also used to calculate rail fare rises as well as the interest on student loans and index-linked government debt.) RPI, which includes housing costs and excludes high earners’ spending, stood at 2.6% for the year to Nov 2013, unchanged from 2.6% for the year to Oct 2013.
The Consumer Price Index (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. CPI stood at 2.1% for the year to Nov 2013, down from 2.2% for the year to Oct 2013.
Future inflation: Confirmation that gap between RPI and CPI expected to be substantial
RPI forecasts
Predictions made on 5 December 2013 by the Office for Budget Responsibility:
Q1 / Q2 / Q3 / Q42013 / 2.8
2014 / 2.9 / 3 / 2.8 / 3
2015 / 3 / 3.2 / 3.3 / 3.5
2016 / 3.6 / 3.6 / 3.6 / 3.5
2017 / 3.5 / 3.7 / 3.8 / 3.9
2018 / 3.9 / 4 / 4 / 4
2019 / 4
Predictions made recently by a range of City and non-City forecasters:
RPI Q4 2013
Average forecast (non-City): 2.8%
Average new forecast: 2.7%
(Oct was 2.6% and Nov 2.6%, which suggests RPI for the year to Dec will be close to 2.9%)
Average forecast (City): 2.8%
Highest forecast: 3.2%
Lowest forecast: 2.6%
Median forecast: 2.7%
RPI Q4 2014
Average forecast (non-City): 3.1%
Average new forecast: 3%
Average forecast (City): 3.1%
Highest forecast: 4%
Lowest forecast: 2.3%
Median forecast: 3%
High RPI Q4 2014 forecasts to quote to employers in pay negotiations are:
Société Générale (4% - forecast made in Dec 2013), National Institute of Economic and Social Research (3.7% - forecast made in Nov 2013), Credit Suisse (3.5% - forecast made in Dec 2013), Goldman Sachs (3.5% - forecast made in Nov 2013), RBS (3.4% - forecast made in Nov 2013), CBI (3.3% - forecast made in Nov 2013).
CPI forecasts
Predictions made on 5 December 2013 by the Office for Budget Responsibility:
Q1 / Q2 / Q3 / Q42013 / 2.2
2014 / 2.3 / 2.4 / 2.2 / 2.3
2015 / 2.1 / 2.2 / 2.1 / 2.1
2016 / 2.1 / 2.1 / 2 / 2
2017 / 2 / 2 / 2 / 2
2018 / 2 / 2 / 2 / 2
2019 / 2
Made recently by a range of City and non-City forecasters:
CPI Q4 2013
Average forecast (non-City): 2.3%
Average new forecast: 2.3%
(Oct was 2.2% and Nov 2.1%, which suggests CPI for year to Dec will be close to 2.6%)
Average forecast (City): 2.3%
Highest forecast: 2.7%
Lowest forecast: 2%
Median forecast: 2.3%
CPI Q4 2014
Average forecast (non-City): 2.4%
Average new forecast: 2.4%
Average forecast (City): 2.4%
Highest forecast: 3.3%
Lowest forecast: 1.6%
Median forecast: 2.4%
CPI in the EU (year to November 2013)
The UK has one of the highest rates of CPI inflation in the EU. And the UK is experiencing CPI inflation at over double the average rate of member states of the EU:
Greece / -2.9%Bulgaria / -1.0%
Cyprus / -0.8%
Latvia / -0.3%
Portugal / 0.1%
Switzerland / 0.2%
Denmark / 0.3%
Ireland / 0.3%
Spain / 0.3%
Malta / 0.3%
Sweden / 0.3%
Hungary / 0.4%
Lithuania / 0.5%
Poland / 0.5%
Slovakia / 0.6%
Croatia / 0.7%
Italy / 0.7%
France / 0.8%
Euro area (17 countries) / 0.8%
Euro area (EA11-2000, EA12-2006, EA13-2007, EA15-2008, EA16-2010, EA17) / 0.9%
Belgium / 0.9%
European Union / 1.0%
Czech Republic / 1.0%
European Economic Area / 1.0%
Luxembourg / 1.1%
Netherlands / 1.2%
Slovenia / 1.2%
Romania / 1.3%
Austria / 1.5%
Germany / 1.6%
Finland / 1.8%
Estonia / 2.1%
United Kingdom / 2.1%
Norway / 2.3%
Iceland / 3.0%
Significant contributions to the elevated rates of inflation in the UK include:
-rise in VAT to 20%,
-increase in food prices following wet weather in UK plus drought in grain producing regions of world, and
-sharp drop in the value of the Pound.
Value of the Pound
Following the UK government assuming the losses of the financial services sector, over £400 billion of public money has been created through the policy known as Quantitative Easing. This measure, which conservatively equates to over £6,420 of tax revenue per UK citizen, has contributed to the value of Sterling being undermined - the Pound has fallen 20% against its pre-Crash high.
The cost of importing goods and services into the UK therefore generally remains significantly elevated.
Earnings and productivity: Bank of England forecast (Nov 2013)
“Unit labour cost growth [meaning wage growth relative to productivity gains] has slowed over the past year, and may turn negative in the near term as growth in productivity outstrips that in wages.
“Further ahead, both productivity and wages are likely to pick up, but only at a gradual pace. Pay pressures are expected to be contained by elevated unemployment: in the central view, annual average earnings growth only rises to a little above 3%, below typical pre-crisis rates of 4.5% or so.
“Among the risks to wages [meaning prospects for wages rising] are that companies become more inclined to grant higher pay awards, perhaps reflecting pockets of skill shortages, or broader concerns that continued pressure on real incomes could undermine employees’ morale or efficiency. That risk may be particularly marked if companies believe that they can recoup higher wage costs through higher prices as the recovery develops.”
Productivity: Office for Budget Responsibility forecast (Dec 2013)
Workers’ output (both total output and hourly output) is predicted to soar:
And if workers are producing dramatically more, employers are likely earning more from individuals’ labour. In which case, employers can afford to pay workers substantially more.
Average earnings
Predictions made recently by a range of City and non-City forecasters:
2013
Average forecast (non-City): 1.4%
Average new forecast: 1.4%
Average forecast (City): 1.4%
Highest forecast: 2.5%
Lowest forecast: 0.8%
Median forecast: 1.3%
Office for Budget Responsibility: 1.5%
2014
Average forecast (non-City): 2.4%
Average new forecast: 2.4%
Average forecast (City): 2.4%
Highest forecast: 3.3%
Lowest forecast: 1.6%
Median forecast: 2.4%
Office for Budget Responsibility: 2.6%
High average earnings forecasts for 2014 to quote to employers in pay negotiations are:
Barclays Capital (4.2% - forecast made in Dec 2013), RBS (3% - forecast made in Nov 2013), CBI (2.9% - forecast made in Nov 2013), Goldman Sachs (2.7% - forecast made in Nov 2013).
Recent RMT Settlements
Company
/Award
/Effective From
Train Operating and Freight Companies
Arriva Trains Wales / · An increase of 3.5% or £600, whichever is greater· Eight mobile Cat 4s to receive parity with static Cat 4 pay
· Travelling time allowance for station staff working away from their home station will be increased from £5 to £6 per day for distances over five miles
· May 2014 RPI or 3% whichever is greater / 1 Jul 2013
1 July 2014
First Scotrail (Drivers) / · 2%
· 2.1% / 1 Oct 2013
1 Oct 2014
Cross Country / · 3.2% / 2013
South West Trains / · 3% on basic rates of pay or £600, whichever is greater
· London & South East Allowances remain at the current rates
· Also covers the former DB Schenker staff transferred to SWT in Sept 2013. These grades will, receive a pro rata percentage increase relating to the date of their 2014 pay anniversary date (1 Jan 2014 for Engineering team members, 1 April 2014 for Fitters & OTMs and 1 July 2014 for FAMS assistants)
· The next pay review for these grades then aligns with other SWT grades in Oct 2014 / 7 Oct 2013
Workshop and Train Maintenance
Alstom Chester / · 2.2%
· 2 hour reduction in the working week / 1 April 2013
Road Transport and Buses
Wilts and Dorset / · 2.5% increase to all rates of pay across all grades including the driver Saturday rate
· New starters rates of pay after training: £8.50 per hours for 1st year, £9 for 2nd year, £9.50 for 3rd year, £10.13 for 4th year onwards
· Work rest days to attract a 50p per hour premium
· Waiting days on company sick will not be paid after the qualifying period.
· Holidays will be paid at an average of the last 12 rostered weeks, excluding rest days and overtime
· 39 hour guaranteed week / 1 July 2013
1 Jan 2014
Damory Coaches / · 2%
· 2.1% / 1 Oct 2013
1 Oct 2014
Stagecoach South Andover / Contract A
Trainee / 3.0%
0-6 months / 2.6%
6-12 months / 2.4%
12-24 months / 2.1%
Over 24 months / 2.1%
Contract B
Trainee / 3.0%
0-6 months / 2.4%
6-12 months / 2.2%
12-24 months / 2.0%
Over 24 months / 2.0%
/ 7 July 2013
Cleaning and Catering
Rail Gourmet / · 2% imposed (other than for those on the Eurostar contract who were TUPEd over as they had their increase in Jan 2013) / July 2013
Skytrac (First Transpennine Express Contract) / · Minimum £7.45 per hour
· Minimum £7.65 per hour / 13 Dec 2013
4 April 2014
Shipping and Docks
Island Line / · 3% on basic rates of pay or £600, whichever is greater
· South East Allowance will remain at the current rate / 7 Oct 2013
Foreland Shipping / · 2.5% / 1 Jan 2014
Recent non-RMT settlements
Company (Sector)
/Award
/Effective From
DHL - Jaguar Land Rover contract (Drivers & warehouse) / · 4.5%· 3.25% (Sept 2013 RPI)
· Sept 2014 RPI / 1 Jan 2013
1 Jan 2014
1 Jan 2015
Rolls Royce (Manufacturing) / · 3.5% (1st year of 3 year deal) / 1 March 2013
Ardagh Glass (Manufacturing) / · 3% (2nd stage of a 3 stage agreement taking place over 2 years) / 1 Aug 2013
Wybone (Manufacturing) / · 5% / 1 Nov 2013
Yours sincerely,
Bob Crow
General Secretary
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