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 round, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 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 28February 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