Circular No.

NP/146/16

19 May 2016

To the Secretary, all Branches & Regional Councils

Dear Colleagues

RMT PAY BULLETIN: May 2016

Headline forecasts
Inflation rate: Average new forecast
April 2016 RPI inflation (change in cost of living relative to same time one year earlier) was 1.3%
For the final three months of 2016, annual RPI (according to the latest forecasts) will rise to 2.2%
For the final three months of 2017, annual RPI (according to the latest forecasts) will rise to 2.9%
Average earnings growth: Average new forecast
Over the course of 2016, average earnings are predicted to increase by 2.6%
Over the course of 2017, average earnings are predicted to increase by 3.1%
Proportion of company turnover paid to Exchequer as tax, is falling
Even companies reliant on public contracts avoid tax. In the year to 30 April 2015, Stagecoach had a
turnover of 3.2 billion, but paid just 25.7 million tax. It is unclear how much Stagecoach spends on
tax advisers - other firms, such as National Express, admit to sometimes spending 1 million a year.

Forecasts in detail: RPI inflation1

Predictions for RPI inflation made by a range of forecasters are:
Q4 2016
Average forecast (non-City): 2.2%
Average new forecast: 2.2%
Average forecast (City): 2.3%
Highest recent forecast: 3%
Lowest recent forecast: 1.6%
Median recent forecast: 2.1%
High RPI Q4 2016 forecasts to quote to employers in pay negotiations are:
Schroders Investment Management (3% - forecast made in May 2016), Nomura (2.8% forecast made in May 2016), Pantheon (2.6% - forecast made in May 2016), Experian Economics
(2.6% - forecast made in May 2016), Commerzbank (2.5% - forecast made in May 2016)

Q4 2017
Average forecast (non-City): 2.9%
Average new forecast: 2.9%
Average forecast (City): 2.9%
Highest recent forecast: 3.5%
Lowest recent forecast: 1.8%
Median recent forecast: 3%
High RPI Q4 2017 forecasts to quote to employers in pay negotiations are:
NIESR (3.5% - forecast made in May 2016), Pantheon (3.5% - forecast made in May 2016),
Economic Perspectives (3.3% - forecast made in May 2016)2, Bank of America/ Merrill Lynch (3.2% forecast made in May 2016), Nomura (3.2% - forecast made in May 2016), Experian Economics
(3.2% - forecast made in May 2016)

The average of forecasts generally suggest a modest rise or fall.

While forecasts can be useful in indentifying a plausible trajectory for inflation and average earnings, the data is unreliable.
This is especially the case during periods of heightened volatility such as now.
Accordingly, the main use of forecasts to us is as a negotiation tool with employers
and not as an accurate predictor of future changes to our members cost of living.
2

https://www.economicperspectives.co.uk/downloads/HMT201605.pdf

Forecasts in detail: Average earnings growth

Predictions for average earnings growth made by a range of forecasters are:
2016
Average forecast (non-City): 2.6%
Average new forecast: 2.6%
Average forecast (City): 2.5%
Highest recent forecast: 3.2%
Lowest recent forecast: 1.8%
Median recent forecast: 2.6%
High average earnings growth forecasts for 2016 to quote to employers in pay negotiations are:
European Commission (3.3% - forecast made in May 2016)3, Schroders Investment Management
(3.2% - forecast made in May 2016), Liverpool Macro Research (3.2% - forecast made in May 2016),
Oxford Economics (3.2% - forecast made in May 2016)

2017
Average forecast (non-City): 3.1%
Average new forecast: 3.1%
Average forecast (City): 3.1%
Highest recent forecast: 3.5%
Lowest recent forecast: 2.6%
Median recent forecast: 3.1%
High average earnings growth forecasts for 2017 to quote to employers in pay negotiations are:
European Commission (3.5% - forecast made in May 2016)4, Capital Economics (3.5% - forecast
made in May 2016), Economic Perspectives (3.5% - forecast made in May 2016), Pantheon (3.5% forecast made in May 2016), IHS Global Insight (3.5% - forecast made in May 2016)

Growth in compensation of employees is expected to accelerate as the labour market tightens further
http://ec.europa.eu/economy_finance/eu/forecasts/2016_spring/uk_en.pdf
4
Table at end of doc entry labelled compensation of employees final two columns
http://ec.europa.eu/economy_finance/eu/forecasts/2016_spring/uk_en.pdf

Recent RMT Settlements

Company

Award

Effective From

Train Operating Companies and Rail freight

First Great Western

Year 2 of two year deal was for a 2%

increase or Feb 2016 RPI, whichever was
greater. Accordingly pay award was for 2%.

1 May 2016

Serco Caledonian
Sleeper

2.32%

1 April 2016

North Yorkshire
Moors Railway

1%

1 Jan 2016

Infrastructure Companies
Babcock Rail

Year One
a) 2% increase on basic rates for all members
covered by Procedure Agreement 1 (General
Collective Bargaining)
b) An additional 0.5% on the basic rate for
those working as Infrastructure Assistant (IA
Grade); Infrastructure Technician (IT Grade);
Clerical Officer Grade 2 (CO2 Grade);
Clerical Officer Grade 3 (CO3 Grade);
Professional & Technical Grade 1 (Grade PM1
Basic & Steps 1 -6 inclusive) and Apprentice.
This will give a total increase of 2.5%
c) A minimum increase in salary of 500 will be
applied where implementation of a) and b)
results in salary increase of less than 500.
d) The levels of meal, lodging disturbance and
associated allowances will be increased by
2%
Year Two
a) 2.5% increase or Jan 2017 RPI, whichever is
greater, on basic rates for all members
covered by Procedure Agreement 1 (General
Collective Bargaining)
b) An additional 0.5% on the basic rate for
those working as Infrastructure Assistant (IA
Grade); Infrastructure Technician (IT Grade);
Clerical Officer Grade 2 (CO2 Grade);
Clerical Officer Grade 3 (CO3 Grade);
Professional & Technical Grade 1 (Grade PM1
Basic & Steps 1 -6 inclusive) and Apprentice.
This will give a total increase of 3%
c) A minimum increase in salary of 500 will be
applied where implementation of a) and b)
results in salary of less than 500.
d) The levels of meal, lodging disturbance and
associated allowances will be increased by
2.5%

4 April 2016

3 April 2017

Unipart Rail
Doncaster

Year One
1.9% increase to base pay, effective
Year Two
0.5% + CPI (CPI as of Jan 2017, published
in Feb 2017) on base rate

Volkerrail

Colas Rail

1 April 2016
1 April 2017

2% on basic rates or 400,

whichever is greater
2% to taxable allowances

Year One
2% increase on all base wages
Year Two
Increase of Feb RPI + 0.5%,
subject to a minimum increase of 2% and a
maximum of 2.5%
Year Three
Increase of Feb RPI + 0.5%,
subject to a minimum increase of 2% and a
maximum of 3.25%

1 April 2016
1 April 2017

1 April 2018

Train workshop and maintenance

Voestalpine VAE UK

2% increase to basic rates of pay for

everyone
Maintain 400 bonus attendance bonus if
Company remains.
Increase the employees Engagement Bonus
from currently 175 to 325

1 April 2016

Cleaning and catering

Carlisle Cleaning
Services Ltd
(Transpennine
Express)
Carillion

Living Wage (level recommended by the

Living Wage Foundation) or 3%, whichever is
greater

1 April 2016

Year One
2% or 520 to basic rates,
whichever is greater

1 April 2015

Year Two
Feb RPI +0.5% or 535,
whichever is greater

1 April 2016

Ships and Docks

DFDS

2%

1 Jan 2016

Heysham Ports

2% on basic pay
0.5% on basic pay

1 Jan 2016
1 June 2016

Harwich
International Port

2% increase on basic pay and variability

Changes to the long service awards

1 Jan 2016

Serco Ltd (PNTL/

INS)

2%
2%

1 April 2016
1 April 2017

Recent non-RMT settlements

Company (Sector)

Award

Effective From

BMW Mini
(Manufacturing)

3.5%

1 Jan 2016

Aldi (Retail)

3.07% for store assistants outside London

1 Feb 2016

Asda N Ireland
(Retail)

3.9%

1 April 2016

Crown Paints
(Manufacturing)

2.625%

1 April 2016

Western Power
Distribution (Utilities)

2.5%

1 April 2016

We use RPI and not other measures of inflation such as CPI or CPIH
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
Telecoms 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 doesnt 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 or a new variation CPIH must be refused and
should be logged with the unions National Policy Department.
Yours sincerely,

Mick Cash
General Secretary