INTRODUCTION SUMMARY BREXIT IN YOUR WORKPLACE

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1 Unite the Union February 2017 INTRODUCTION Headline employment figures may be strong but, as the TUC explains, there is much to be concerned about in the new normal : a growth in insecure work, underemployment and the continuation of feeble pay growth. 1 The TUC has examined the growth in insecure work and the sectors that are driving it - mainly traditional industries, rather than newer tech sectors. 2 The spectre of a hard Brexit looms over much economic analysis, not least in respect of the impact that the fall in the value of sterling following the referendum vote has had on projections for higher inflation. Unite is concerned that employers may be exploiting uncertainty around Brexit to attack terms, conditions and pay. Our Brexit Check team want to hear from you and there is a short on-line questionnaire you can fill in. Please see below for further details. Median settlements rise to 2.3 on LRD Payline RPI rises to 2.6 and CPI rises to 1.8 (January 2017). RPI forecast to reach 3.1 by April 2017 Nearly half of all FTSE 100 companies could have cleared their pension deficit with payment of one year s dividends SUMMARY Average rents rise 2.2 nationwide John Earls, Head of Research The average cost of full-time childcare (50 hours) is per week UK wide Average weekly earnings rise 1.9 on last year (Total pay, including bonuses, single month) The Living Wage Foundation Living Wage is now 8.45 (UK) and 9.75 (London) per hour. BREXIT IN YOUR WORKPLACE As the UK inches closer to leaving the EU Unite is determined to make sure Brexit happens on our terms. Unite is launching a new campaign to gather evidence about the impact of Brexit on work and pay. We need to hear from you. Our strength as a trade union comes from workplace organisation, it s vital that we use this strength now to make sure we aren t forced to shoulder the cost of Brexit. Some employers are already using Brexit as a smokescreen to attack terms, conditions and pay, e.g. by proposing artificially low offers during pay talks or trying to opt out of Holiday Pay agreements. If you re negotiating and Brexit is an issue please let our dedicated team know via:

2 PAY SETTLEMENTS LRD Payline median settlements rise to 2.3 in the year to December 2016 Median settlements in IDR and XpertHR data remain at 2 Pay data analysis includes data published in Labour Research Department s Workplace Report (January), XpertHR 2017 Pay Awards and the February s Incomes Data Research Settlements in Brief. LRD Median settlements rise to 2.3 Labour Research Department reported in January s Workplace Report that In the three months to December, LRD Payline s midpoint increase on the lowest basic rate in collectively agreed settlements was 2.3. However, the increase in the annual rate of inflation under the Retail Prices Index (RPI) was 2.5. That means settlements lost out in real terms by 0.2 percentage points. Recent Unite Settlements as reported to the Pay & Conditions database Agreement Sector Start Description Cummins Turbo Technologies (Huddersfield) Manufacturing 01/01/17 A 3.5 increase from 1 January 2017 with no changes to terms and conditions and 35 hour week retained. Cereal Partners UK (Bromborough) Manufacturing 01/01/17 A 2.5 increase to basic pay rates from 1 January Virgin Atlantic Transport 01/10/16 (30 month) 4.55 for Flight Service Manager and Cabin Service Supervisor grades and 6.65 increase in the basic for Cabin Crew grade backdated to October This is followed by a 3 or RPI whichever is greater uplift from 1st December 2017 The trip element of pay is also due to increase by 18 Nissan Manufacturing 01/01/17 Aston Martin Manufacturing 01/12/ plus a 750 lump sum for year one and in year two, 2.75 from 1 January An increase in maternity paid leave from 18 to 26 weeks starts in January 2017 Two-year pay agreement gives shop floor and staff a 379 lump sum in December 2016, consolidation of 650 (equivalent to 2.2 for a grade C worker) into 2016 new base pay rates, followed by a further 3 increase on pay rates on 1 January January 2018, there will be a general increase in pay of 3 or RPI plus 0.5, whichever is the greater. Jaguar Land Rover (JLR) Manufacturing 01/01/17 The two-year deal of 3.5, plus a 750 bonus in year one; and an inflation proofed retail price index (RPI) plus 0.5 rise in year two Source: LRD Pay & Conditions database online, February

3 Labour Research Department s Payline Database Percentage increases on lowest basic rates (by agreements covered) for the three months up to and including: 2016 This pay Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec round, Aug-Dec All agreements Private sector Public sector Manual Non-manual All industries All services Source: LRD Workplace Report, January 2017 XpertHR - median settlements at 2 and forecast at 2.0 throughout 2017 XpertHR reports median pay increases of 2, based on a sample of 167 pay awards, covering almost 300,000 employees in the period from 1 November 2016 to 31 January 2017 According to XpertHR Employers are sticking close to the median award, with one-third of deals set at exactly 2, and half of all pay awards within a 0.8 percentage point range around the median, from 1.5 to 2.3. Split by sector, we again find that the 2 median in the private sector is ahead of the 1 median pay award in the public sector over the past year. XpertHR recently forecast settlements to remain at 2 throughout Source: XpertHR 23 February 2017 INCOMES DATA RESEARCH Median 2 Incomes Data Research (IDR) reported in its latest Settlements in Brief that latest analysis of pay settlements shows that the median has remained steady for 12 consecutive months at 2 in the three months to December The private services median remains at 2 for the second consecutive month, having fallen from 2.6 in the three months to October. IDR pay settlement data three months to end of December 2016 Whole economy Private sector Public sector Median Average Interquartile range 1.5 to to to 1.0 Based on 22 settlements covering 658,005 employees Source: IDR Settlements in Brief, February IDR produces a quarterly Pay Climate report due out on 28 February 2017 and this is supplemented monthly by Settlements in Brief 3

4 INFLATION AND PRICES RETAIL PRICE INDEX (RPI) 2.6 IN THE YEAR TO JAN 2017 (2.5 IN DEC 2016) CONSUMER PRICE INDEX (CPI) 1.8 IN THE YEAR TO JAN 2017 (1.6 IN DEC 2016) CONSUMER PRICE INDEX - HOUSING (CPIH) 2.0 IN THE YEAR TO JAN 2017 (1.7 IN DEC 2016) RPI and CPI Inflation rise rapidly The all-items Retail Prices Index (RPI) continued to rise rapidly, reaching 2.6 in the year to January 2017, CPI also rose to 1.8 and CPIH rose to 2.0. All are now at their highest level for two and a half years (since July 2014). Price inflation increase on a year earlier RPI CPI CPIH* January February March April May June July August September October November December January *The UK Statistics Authority announced that from March 2017 the CPIH will replace the CPI as the Government s preferred inflation index Pay specialists IDR commented in their inflation update bulletin that The rise in inflation is due to the fall in the relative value of sterling, which has made imports more expensive, and this has fed through to retail prices. The main upward pressures on inflation in the year to January were motoring expenditure and food. Motoring expenditure includes petrol, where prices rose between December 2016 and January 2017 by 3.8p per litre to stand at 118.0p per litre on average - compared with a fall of 2.1p per litre over the same period last year to take the average price to 101.9p per litre. The most significant contribution from food prices came from minced beef, where prices rose by more than a year ago; and also bread and cheese, where prices rose this year in contrast to a drop over the same period last year. The items in the basket of goods showing the largest rises are in the table below. 4

5 RPI components rising faster than Inflation (2.6) annual increase Broad Categories Clothing & footwear 6.0 Tobacco 4.7 Personal expenditure 3.7 Motoring expenditure 7.2 Travel and Leisure 4.4 Consumer durables 3.7 Significant rises Butter 5.3 Tea 5.6 Sugar and preserves 7.0 Cigarettes 4.8 Housing Depreciation (Jan 1995 = 100) 6.3 Council tax and Rates 2.8 Dwelling insurance and ground rent 5.2 Oil and other fuels 49.4 Furnishings 4.6 Fees and subscriptions 2.9 Men's outerwear 5.1 Women's outerwear 9.3 Children's outerwear 5.6 Petrol and oil 16.2 Vehicle tax and insurance 14.5 Bus and coach fares 10.2 Books and newspapers 5.6 Television licences and rentals 2.7 Entertainment and other recreation 4.6 UK holidays (Jan 1994=100) 7.5 Source: ONS February 2017 Inflation forecasts The latest inflation forecasts reported by City economists suggest that RPI could be higher than 3 in April 2017 and continue to rise to up to 3.5 in April In Pay Climate, IDR says The common factor underlying the higher projections is the fall of about 15 in the value of sterling following the referendum vote to leave the EU. With uncertainty following the EU vote and wider volatility across the world these projections may change regularly. 5

6 Inflation forecasts CE Citi GS H JPM MS SB Rounded average November December January February March April May June July August September October November December January February March April CE Capital Economics; Citi Citibank; GS Goldman Sachs; H Heteronomics, JPM JP Morgan; MS Morgan Stanley; SB Scotia Bank Source: IDR Pay Climate, issue 07, November 2016 Update due 28 February 2017 HM Treasury s monthly comparison of independent forecasts reports RPI forecasts for the fourth quarter of 2017 and 2018 as follows: fourth quarter 2017 fourth quarter 2018 Median Beacon Economic Forecasting CBI CEBR Economic Perspectives Experian Economics IHS Markit Economics ITEM Club NIESR Oxford Economics Source: HM Treasury, Forecasts for the UK Economy, February

7 Childcare Childcare is a major cost for working families particularly for families with nursery age children. According to the Family and Childcare Trust 3, the average price of sending a child under two to nursery full-time (50 hours) is per week UK wide - around 900 a month, or close to 11,000 a year. These figures are even higher in London. A family with one child under two in part-time childcare and one child aged five at an afterschool club can now expect to pay 7,933 per year for childcare, over 28 per cent of median household income (ONS data). The British Chamber of Commerce estimate that once tax is factored in, the typical second-earner would need to be taking home 13,000 just to afford childcare, and that's before any other costs relating to returning to work, such as travel, are included. 4 Average weekly childcare costs by region and country, 2016 (Due to be updated 2 March 2017) Region/Country Nursery 25 hours (under 2) Nursery 25 hours (2 and over) Childminder 25 hours (under 2) Childminder 25 hours (2 and over) After-school club 15 hours Source: Family and Childcare Trust, 2016 Childcare Survey, updated annually due out 2 March 2017 Childminder after-school pick up East of England East Midlands London North East North West South East South West West Midlands Yorkshire and Humberside England regional average Scotland average Wales average Britain average cost survey 2016 FINAL VERSION.pdf /workers-are-quitting-jobs-over-high-childcare-costs 7

8 Housing Research from poverty campaigners the Joseph Rowntree Foundation (JRF) 5 has found that the number of working families living in poverty after housing costs has risen by two million from 5.4 million to 7.4 million over the last decade. And since , when the economic recovery began, in-work poverty has increased by 1.1 million people. The rise is driven by the UK s housing crisis, particularly high costs and insecurity in the private rented sector. Average rents continue to rise with ONS showing a 2.2 rise nationwide and over 3 in the East and South East. Private Housing Rental Prices Experimental Index of Private Housing Rental Prices (ONS) - 12 month price change September 2016 Country/region Percentage change on a year earlier Great Britain 2.2 GB excluding London 2.3 North East 0.9 North West 1.2 Yorkshire and The Humber 1.5 East Midlands 2.8 West Midlands 2.2 East of England 3.0 London 2.1 South East 3.3 South West 2.8 England 2.3 England excluding London 2.5 Wales 0.4 Scotland 0.1 Source: ONS Index of Private Housing Rental Prices, Published February This also includes links to other Government sources on housing including data on current social rents. These can be found in the background notes 6 Private company statistics on the private rental market These tend to focus on new rental contracts whereas the IPHRP is a survey of all rents. Countrywide (January 2017) Average renewed tenancy of 885 (Greater London 1,217) Average new rents at 929 (Greater London 1,260) Homelet (January 2017) Average UK rental value for new rents was 888 pcm, (Greater London 1,497)

9 Price and percentage change by country and government region Country/region Price Monthly change Annual change England 236, Northern Ireland (Quarter ) 125, Scotland 141, Wales 148, East Midlands 176, East of England 281, London 483, North East 128, North West 152, South East 316, South West 242, West Midlands Region 181, Yorkshire and The Humber 154, Source: ONS UK House Price Index, Published February 2017 AVERAGE EARNINGS AVERAGE WEEKLY EARNINGS: RISES 1.9 IN THE YEAR TO DEC 2016 (DOWN FROM 2.9 NOV 2016) (TOTAL PAY, INCLUDING BONUSES, SINGLE MONTH, SEASONALLY ADJUSTED) Growth in seasonally adjusted average weekly earnings (total pay) rose by 1.9 in December (down from 2.9 in November). The rise in average weekly earnings for the whole economy was 2.6 averaged over the previous three months (down from 2.8 in November). The regular pay figures, which strip out bonuses, rose 2.4 in December, down from 2.7 in November. Average weekly earnings broken down by sector (seasonally adjusted) Source: ONS UK Labour Market Statistical Bulletin, February 2017 Total Pay (including Bonuses) Regular Pay Single month 9 3 month average Single month 3 month average Whole economy Private sector Public sector Public Sector excluding financial services Manufacturing Services Finance and business services Construction Wholesale, retailing, hotels & restaurants

10 Full-time average weekly earnings by occupation The table below is from LRD Fact Services and has recently changed its methodology. It is now based on median average earnings figures published in the Annual Survey of Hours and Earnings (ASHE) The original figures have been uprated by the 0.8 increase in average weekly earnings for the whole economy between April 2016 and December 2016 to give a rough estimate of earnings now in the various occupational groups. a week All employees All male All female Managers Professionals Associate professionals Admin & secretarial Skilled/craft Services Sales Operatives Other manual jobs Source: LRD Fact Service, Volume 79 Issue 7, 16 February 2017 National minimum wage rates: LOW AND HIGH PAY These rates are for the Government s National Living Wage (NLW) and the National Minimum Wage (NMW): Year 25 + (NLW) October 2016 (current rates) 21 to to 20 Under 18 Apprentice 7.20* Living Wage Foundation rates: *The NLW rises apply in April ( 7.50 in 2017), rather than October with the NMW rates. The current Living Wage Foundation rates for the Living Wage 7 (announced 31st October 2016) are: UK rate: 8.45 per hour across the UK (an increase of 2.4) London rate: 9.75 per hour (an increase of 3.7) There are nearly 1000 accredited Living Wage employers in London and nearly 3000 UK wide. 7 Further details on the real Living Wage are available on the Living Wage Foundation website at: 10

11 Explaining the difference between UK wage floor rates: National Minimum Wage (NMW) National Living Wage (Statutory NMW 25+) Living Wage Foundation Is it the law? Law Law Voluntary What age group is covered? There are separate rates for under 18, 18-20, year olds and apprentices 25 and older 18 and older How is it set? Negotiated settlement based on recommendations from businesses and trade unions A of median income, currently at 55 it aims to reach 60 by 2020 Calculation made according to the cost of living, based on a basket of household goods and services When is it published? October (annually) April (annually) November (annually) Joseph Rowntree Foundation Minimum Income Standard (MIS): The National Living Wage still leaves workers well short of the Minimum Income Standard (MIS) as defined by the JRF report. This has been updated in July and is published annually. April 2016 Single Adult of working age Two earner couple with two children Lone parent with one child MIS (including rent, childcare and council tax), per week Hourly wage rate(full time) Annual Earnings requirement ,311 37,812 35,507 Four million more people living on inadequate incomes in modern Britain The new research for the independent Joseph Rowntree Foundation (JRF) has looked at how different kinds of household are faring against the Minimum Income Standard (MIS) from It warns that millions of just managing families are on the tipping point of falling into poverty as prices rise in the shops, with forecasts showing the cost of living could be 10 per cent higher by Between 2008/9 2014/5, based on the latest available data from official statistics: The number of individuals below MIS rose by four million, from 15 million to 19 million (from 25 to 30 per cent of the population). There are 11 million people living far short of MIS, up from 9.1 million, who have incomes below 75 of the standard and are at high risk of being in poverty

12 The remaining eight million fall short of the minimum, by a smaller amount, and despite having a more modest risk of poverty, are just about managing at best. The increase in the numbers below MIS has been driven by rising costs while incomes stagnate. The price of a minimum basket of goods has risen since 2008, and average earnings by only half that amount. The cost of living could be 10 per cent higher by 2020, a period when state support through tax credits and working age benefits has been frozen. Almost three million working age households, six in 10 below MIS, have at least one person in work. Families with children continue to have the highest risk of having incomes that fall short of the standard, with working parents facing worsening prospects. Full release here: Minimum wage cheats named and shamed The Government has named and shamed 359 businesses which have failed to pay the National Minimum Wage (NMW). The 359 businesses had underpaid 15,513 workers a total of 994,685. These include branches of Debenhams, Subway, Lloyds Pharmacy, Osteria San Lorenzo, St Mirren Football Club and Calderdale and Huddersfield NHS Foundation Trust. Excuses used by businesses for not paying the full basic wage included using tips to top up their pay, making reductions to pay for a Christmas party, or making staff pay for their own uniforms. Reported in LRD Fact Service Volume 79, Issue 7, 16 February 2017 High Pay Centre report The High Pay Centre reported that the average FTSE100 chief executive s pay package was 5.48 million in 2015, up from 4.96 million in 2014 a 10.4 increase over the period. Full report here: pay-rise-thatll-do-nicely Shareholder Dividends could payoff pension deficits Nearly half of all FTSE 100 companies could have cleared their pension deficit with payment of one year s dividends. The analysis by pension consultancy JLT Employee Benefits 9 of annual reports showed dividend payments rose from 67bn, as disclosed pension deficits hit 25bn. According to the research only six FSTE 100 companies paid more in contributions to their defined benefit pension schemes than in dividends to their shareholders. In contrast 46 out of 60 companies with disclosed pension deficits could have cleared their shortfalls by withholding a year s dividends. Twenty-eight directors share 68.4 million LRD Fact Service has compiled a new list of high paid Executives. The reporting season for companies is starting again and so their remuneration reports are revealing the latest pay packages given to top executives at stock exchangequoted companies. The first list in Fact Service s reporting season covers 28 executives at 14 companies that had a remuneration package of over 1 million. The total paybill for the 28 came to million. The list includes executives from Compass, Imperial Brands, ABF, Greencore, EasyJet, Britvic and Paragon. Full list is available in LRD Fact Service, Volume 79 Issue 6 9 Full report here: 12

13 INFORMATION AND SUPPORT Unite pay and conditions database (members only) All Unite members can access the pay and conditions database maintained by LRD PayLine using the link above or through the Unite website (go to Unite at work, then research and resources and Unite pay and conditions database ). You shouldn t need to log-in if already logged in as a member. However, Unite members can also access the Unite pay and conditions database maintained by LRD at or through the LRD website - username: unite, password: opal961 The database contains details of settlements, pay rates, as well as details on regional allowances, shift pay, and overtime. It is searchable and can be broken down by sector, type of worker and region. It also has information on Living Wage employers and other conditions such as working time and allowances. Pay settlements history User feedback said that whilst the latest pay deal is the most important pay deal to see for any agreement, it would also be useful to be able to see information about earlier pay deals. LRD have now added this functionality to the pay increases (full) report. Unite guides There are a number of Unite guides on workplace issues available to reps and members on the Unite website including A Wage You Can Live On an activist s guide to better pay for all and Company accounts and how to use them. Go to the Research & resources section in the Unite at Work tab and click on Guides, or alternatively click on the link below: There are a range of guides on organising around pay under the Work, Voice, Pay section of the Unite website: Unite s Equality department provides guidance and support for reps seeking to challenge pay discrimination and bring in fair pay. This can be found here: Contact details Bargaining Brief compiler: James Lazou james.lazou@unitetheunion.org Company accounts Requests for information relating to company accounts should be sent to: john.neal@unitetheunion.org ACCESSING DATA The data contained in this brief can all be obtained by using online facilities available to Unite members and general websites. All Unite members can access the pay and conditions database maintained by LRD at or through the LRD website - username: unite, password: opal