Circular No. NP/326/13

20th November 2013

TO: ALL BRANCHES, REGIONAL COUNCILS, REGIONAL OFFICES,

COUNCIL OF EXECUTIVES & HO OFFICERS.

Dear Members,

RMT PAY BULLETIN: November 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 October 2013, down from 3.2% the month before.

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 2.2% for the year to October 2013, down from 2.7% the month before.

Future inflation

Below are the latest predictions for what RPI and CPI will be in the fourth quarter of 2013 and also in the fourth quarter of 2014:

RPI Q4 2013 / Forecast / Date made
Bank of America-Merrill Lynch / 3.2 / Sep
Barclays Capital / 2.8 / Nov
Capital Economics / 2.8 / Oct
Citigroup / 3 / Nov
Commerzbank / 2.6 / Nov
Credit Suisse / 3.1 / Nov
Deutsche Bank / 3.3 / Aug
Fathom Consulting / 2.8 / Nov
Goldman Sachs / 3.1 / Nov
HSBC / 2.9 / Nov
ING Financial Markets / 3.2 / Nov
Lombard Street / 2.5 / Sep
Morgan Stanley / 3.1 / Oct
Nomura / 2.6 / Nov
RBS / 3 / Nov
Santander GBM / 2.6 / Nov
Schroders / 3 / Sep
Scotiabank / 3.2 / Sep
Société Générale / 2.6 / Sep
UBS / 3.2 / Oct
British Chambers of Commerce / 3 / Sep
Beacon Economic Forecasting / 3.2 / Nov
Cambridge Econometrics / 3.5 / Nov
CBI / 3.2 / Nov
CEBR / 3.2 / Nov
Economic Perspectives / 2.9 / Nov
Experian Economics / 2.9 / Nov
EIU / 2.7 / Nov
IHS Global Insight / 2.8 / Nov
ITEM Club / 3.1 / Oct
NIESR / 3 / Nov
Oxford Economics / 2.6 / Nov
Average forecast: non-City / 2.9
Average new forecast / 2.9
Average forecast: City / 2.9
Highest forecast / 3.5
Lowest forecast / 2.5
Median forecast / 3
CPI Q4 2013 / Forecast / Date made
Bank of America-Merrill Lynch / 2.8 / Sep
Barclays Capital / 2.2 / Nov
Capital Economics / 2.1 / Oct
Citigroup / 2.3 / Nov
Commerzbank / 2 / Nov
Credit Suisse / 2.5 / Nov
Daiwa Capital Markets / 2.9 / Sep
Deutsche Bank / 2.6 / Aug
Fathom Consulting / 2.3 / Nov
Goldman Sachs / 2.5 / Nov
HSBC / 2.6 / Nov
ING Financial Markets / 2.7 / Nov
Lombard Street / 2.2 / Sep
Morgan Stanley / 2.5 / Oct
Nomura / 2.1 / Nov
RBS / 2.4 / Nov
Santander GBM / 2.2 / Nov
Schroders / 2.6 / Sep
Scotiabank / 2.5 / Sep
Société Générale / 2.4 / Sep
Standard Chartered / 2.5 / Oct
UBS / 2.7 / Oct
British Chambers of Commerce / 2.5 / Sep
Beacon Economic Forecasting / 2.5 / Nov
Cambridge Econometrics / 2.8 / Nov
CBI / 2.7 / Nov
CEBR / 2.3 / Nov
Economic Perspectives / 2.6 / Nov
Experian Economics / 2.5 / Nov
EIU / 2.3 / Nov
IHS Global Insight / 2.3 / Nov
ITEM Club / 2.5 / Oct
Liverpool Macro Research / 2.7 / Nov
NIESR / 2.3 / Nov
Oxford Economics / 2.1 / Nov
EC / 2.6 / Nov
OECD / 2.6 / Nov
IMF / 2.7 / Oct
Average forecast: non-City / 2.5
Average new forecast / 2.4
Average forecast: City / 2.4
Highest forecast / 2.9
Lowest forecast / 2
Median forecast / 2.5
RPI Q4 2014 / Forecast / Date made
Bank of America-Merrill Lynch / 2.8 / Sep
Barclays Capital / 2.7 / Nov
Capital Economics / 2.3 / Oct
Citigroup / 2.9 / Nov
Commerzbank / 2.7 / Nov
Credit Suisse / 3.6 / Nov
Deutsche Bank / 2.7 / Aug
Fathom Consulting / 3.3 / Nov
Goldman Sachs / 3.3 / Nov
HSBC / 3.8 / Nov
ING Financial Markets / 3.1 / Nov
Lombard Street / 2.5 / Sep
Morgan Stanley / 3.3 / Oct
Nomura / 3 / Nov
RBS / 3.4 / Nov
Santander GBM / 2.9 / Nov
Schroders / 3.3 / Sep
Scotiabank / 3.3 / Sep
Société Générale / 3.7 / Sep
UBS / 3.1 / Oct
British Chambers of Commerce / 3 / Sep
Beacon Economic Forecasting / 2.5 / Nov
Cambridge Econometrics / 3.3 / Nov
CBI / 3.3 / Nov
CEBR / 3.2 / Nov
Economic Perspectives / 3.6 / Nov
Experian Economics / 3 / Nov
EIU / 2.9 / Nov
IHS Global Insight / 3.2 / Nov
ITEM Club / 2.9 / Oct
NIESR / 3.7 / Nov
Oxford Economics / 2.9 / Nov
Average forecast: non-City / 3.1
Average new forecast / 3.1
Average forecast: City / 3.1
Highest forecast / 3.8
Lowest forecast / 2.3
Median forecast / 3.1
CPI Q4 2014 / Forecast / Date made
Bank of America-Merrill Lynch / 2.2 / Sep
Barclays Capital / 2.1 / Nov
Capital Economics / 1.6 / Oct
Citigroup / 2.1 / Nov
Commerzbank / 2.2 / Nov
Credit Suisse / 2.7 / Nov
Daiwa Capital Markets / 2.5 / Sep
Deutsche Bank / 1.9 / Aug
Fathom Consulting / 3.5 / Nov
Goldman Sachs / 2.4 / Nov
HSBC / 2.4 / Nov
ING Financial Markets / 2.6 / Nov
Lombard Street / 2.2 / Sep
Morgan Stanley / 2.5 / Oct
Nomura / 2.3 / Nov
RBS / 2.6 / Nov
Santander GBM / 2.3 / Nov
Schroders / 2.9 / Sep
Scotiabank / 2 / Sep
Société Générale / 3.4 / Sep
Standard Chartered / 1.9 / Oct
UBS / 2.6 / Oct
British Chambers of Commerce / 2.3 / Sep
Beacon Economic Forecasting / 2 / Nov
Cambridge Econometrics / 2.6 / Nov
CBI / 2.4 / Nov
CEBR / 2.4 / Nov
Economic Perspectives / 3.4 / Nov
Experian Economics / 2.4 / Nov
EIU / 2.8 / Nov
IHS Global Insight / 2.3 / Nov
ITEM Club / 2.1 / Oct
Liverpool Macro Research / 2.4 / Nov
NIESR / 2.6 / Nov
Oxford Economics / 1.8 / Nov
EC / 2.3 / Nov
OECD / 2.4 / Nov
IMF / 2.3 / Oct
Average forecast: non-City / 2.4
Average new forecast / 2.5
Average forecast: City / 2.4
Highest forecast / 3.5
Lowest forecast / 1.6
Median forecast / 2.4

CPI inflation as forecasted by Bank of England in November 2013

“The recent upswing in growth seems set to be sustained as the lifting of uncertainty and thawing of credit conditions start to unlock pent-up demand. However, the brightening outlook follows the most prolonged downturn on record. So it is likely to be some time before slack in the economy is materially eroded.

CPI inflation fell to 2.2% in October and is expected to fall further as the impetus from import prices fades. A gradual rise in productivity growth and a persistent margin of spare capacity should help to contain domestic cost pressures. Inflation therefore returns to 2% despite a continuing elevated contribution from domestic energy bills and [university] tuition fees.”

CPI inflation projection based on:

-constant nominal interest rates at 0.5% and £375 billion asset purchases (ie QE)

“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.”

Recent RMT Settlements

Company

/

Award

/

Effective From

Train Operating and Freight Companies

First Great Western / ·  3.2% (Feb 2013 RPI) increase to salaries and allowances / 1 May 2013
Road Transport and Buses
UPS / ·  2.3% increase to all rates of pay
·  5% premium on overtime rates for hours worked in excess of 40 during the normal working week (excludes weekend/6th shift overtime rates).
·  2.4% increase to all rates of pay / 1 March 2013
1 Sept 2013
1 March 2014
First Hants & Dorset Trim / ·  2.5% increase to basic rates
·  Overtime rates:
For hours worked extending working day Monday-Friday: time plus 20%
For hours worked Saturday and Sunday: time plus 20% / 1 July 2013
Shipping and Offshore
Maersk Nkossa II / ·  4.5% / 1 Feb 2013
Orkney Ferries / ·  £600 consolidated lump-sum payment to all seagoing staff (equates to a 2.5% increase based on a rating’s salary)
·  2% for all sea-going staff / 1 April 2012
1 April 2013
Gulf Offshore / ·  3.3% / 1 July 2013

Recent non-RMT settlements

Company (Sector)

/

Award

/

Effective From

Magna International (Manufacturing) / ·  4% / 1 Jan 2013
Tullis Russell (Manufacturing) / ·  3% / 1 April 2013
Messier-Dowty (Engineering) / ·  2.5% / 1 June 2013
Actavis (Manufacturing) / ·  3% / 1 Aug 2013
BOC Manual Cylinder Fillers (Manufacturing) / ·  2.5% / 1 Sept 2013

Yours sincerely,

Bob Crow

General Secretary