Circular No. NP/152/15 19 August 2015

TO: ALL BRANCHES, REGIONAL COUNCILS,

REGIONAL OFFICES, COUNCIL OF EXECUTIVES & HO OFFICERS

Dear Members,

RMT PAY BULLETIN: August 2015

Headline forecasts

Inflation rate: Average new forecast

July 2015 RPI inflation (change in cost of living relative to same time one year earlier) was 1%

For the final three months of 2015, annual RPI (according to the latest forecasts) will rise to 1.2%

For the final three months of 2016, annual RPI (according to the latest forecasts) will rise to 2.8%

Average earnings growth: Average new forecast

Over the course of 2015, average earnings are predicted to increase by 2.7%

Over the course of 2016, average earnings are predicted to increase by 3.2%

Proportion of company turnover spent on worker remuneration is well below pre-Crisis levels

The proportion of a company’s turnover that it spends on worker pay has declined: 10 years ago Stagecoach spent about half of its turnover on worker remuneration (now it is 40%); Alstom was spending about 30% (now it is a bit over 20%); Bibby Line was spending 30% (now halved to 15%).

Forecasts in detail: RPI inflation[1]

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

Q4 2015

Average forecast (non-City): 1.2%

Average new forecast: 1.2%

Average forecast (City): 1.3%

Highest recent forecast: 1.6%

Lowest recent forecast: -0.4%

Median recent forecast: 1.3%

High RPI Q4 2015 forecasts to quote to employers in pay negotiations are:

Centre for Economics and Business Research (1.6% - forecast made in August), Fathom Consulting (1.6% - forecast made in August), Société Générale (1.5% - forecast made in August), Experian Economics (1.5% - forecast made in August)

Q4 2016

Average forecast (non-City): 2.8%

Average new forecast: 2.8%

Average forecast (City): 2.8%

Highest recent forecast: 3.5%

Lowest recent forecast: 1.3%

Median recent forecast: 2.9%

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

ING Financial Markets (3.5% - forecast made in August), Centre for Economics and Business Research (3.3% - forecast made in August), Nomura (3.3% - forecast made in August), Economic Perspectives (3.2% - forecast made in August), Oxford Economics (3.2% - forecast made in August)

Forecasts in detail: Average earnings growth

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

2015

Average forecast (non-City): 2.7%

Average new forecast: 2.7%

Average forecast (City): 2.8%

Highest recent forecast: 3.5%

Lowest recent forecast: 2%

Median recent forecast: 2.7%

High average earnings growth forecasts for 2015 to quote to employers in pay negotiations are:

Credit Suisse (3.5% - forecast made in July), Fathom Consulting (3.3% - forecast made in July), Nomura (3.1% - forecast made in August), Beacon Economic Forecasting (3.1% - forecast made in August), Oxford Economics (3.1% - forecast made in August)

2016

Average forecast (non-City): 3.3%

Average new forecast: 3.2%

Average forecast (City): 3.4%

Highest recent forecast: 4.1%

Lowest recent forecast: 2.2%

Median recent forecast: 3.4%

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

Barclays Capital (4.1% - forecast made in August), ING Financial Markets (4% - forecast made in August), Citigroup (3.9% - forecast made in August)

Recent RMT Settlements

Company

/

Award

/

Effective From

Train Operating Companies
Abellio Scotrail – (Drivers) / ·  2.5% increase, with productivity strings of new technology, training and tablets.
·  £67.50 for Sunday Booking-On. / 1 April 2015
Cross Country Trains / Year One
·  An increase of 2% (March 2015 RPI + 1.1%) on basic rates of pay and dynamic allowances across all relevant grade groups
A minimum rate of pay of £7.20 per hour will apply in line with the National Living Wage.
Year Two
·  An increase of April 2016 RPI (as published in May 2016) or a 2% increase on basic rates of pay and dynamic allowances across all relevant grade groups
In addition to this offer, Cross Country sick pay arrangements will apply to all Cleaning grades, effective 1 April 2016. / 28 May 2015 to 27 June 2016
28 June 2016 to 27 May 2017
Infrastructure Companies
Telent / Year One
·  1.8% on basic salaries
Year Two
·  2% on basic salaries / 1 March 2015
1 March 2016
Network Rail High Output (ex Amey/ Colas) / ·  2.25% increase for all former Amey employees
This offer is in line with the 2nd year payment to the former Colas employees as part of their 2 year pay settlement. / 1 March 2015
Train workshop and maintenance
Bombardier Crewe / ·  2.5% increase
·  2.5% increase
There will be an introduction of a voluntary additional hours arrangement. / 1 Jan 2015
1 Jan 2016
Bombardier Ramsgate (Materials Handlers) / Year One
·  2.5%
Year Two
·  2.5% / 1 April 2015
1 April 2016
Alstom Transport (W Coast) / ·  An increase of 2% to base salary (for WCML and PSG grades). The increase will be applied to the 37/42 adjustment and London Weighting Allowance.
·  “Red-Circled” employees will receive the full increase for this year only on their salary.
·  Driving Allowance will remain at its current rate and conditions applied for year 2015/16. / 1 June 2015

Road Transport and Buses

DHL Coventry
(now closed) / ·  1.5% on basic salaries / 1 April 2015

London Transport and other Metro

Exterion Media / ·  2% / 1 April 2015

Recent non-RMT settlements

Company (Sector)

/

Award

/

Effective From

FGH – Grattans (Retail) / ·  2.2% / 1 May 2015
FMC - Girvan (Manufacturing) / ·  2.25% / 1 May 2015
Thorn Lighting (Manufacturing) / ·  3% / 1 May 2015
London United Busways (Transport) / ·  5% / 1 May 2015
Johnson Matthey (Manufacturing) / ·  2.5% / 1 July 2015
Finlay Beverages – Pontefract (Food processing) / ·  2% / 1 July 2015

Why we use RPI and not any other measure of inflation

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 inflation must be refused and should be logged with the union’s National Policy Department.

Yours sincerely,

Mick Cash

General Secretary

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[1] The average of forecasts generally predict a modest rise or fall. While forecasts can be useful in identifying trends, the data should not be relied on overly - the economy is complex and no model can anticipate what will happen in all circumstances.