By Christopher Hackworth of the Bank's Structural Economic Analysis Division.
Pay settlements negotiated between employers and their employees have fallen sharply during 2009. Pay settlements have averaged below 2%, with many companies freezing pay. The recession, and the associated drop in employers' demand for labour, has been a key influence on settlements. Inflation measures frequently cited in pay negotiations have also moderated, further reducing upward pressures on pay. This short article examines the recent movements in settlements.
Recent developments in pay settlements