Wednesday, March 14, 2007
City bonuses boost pay
Posted by David Smith at 10:15 AM
Category: Thoughts and responses

Average earnings including bonuses rose by 4.2% in the year to January, up from 4% in December. Private sector pay, again including bonuses, was up by 4.4%, compared with 3.2% for the public sector. Will this be enough to worry the Bank of England's monetary policy committee? Perhaps, though they will also have noticed that the ex-bonuses increase dropped from 3.7% to 3.6%. Unemployment showed modest falls on both measures. More earnings details here.


Looking at single month earnings ex bonuses, private services and manufacturing increases have been falling since October 2006 - while public sector is stable at 3.2%.

Looks like the City bonus distortion is around again, but City commentators should recall that if it is their own bonuses (and only their own bonuses) causing earnings movements at this time of year, then perhaps a windfall tax might be a better idea than changing interst rates.

Posted by: Paul Bivand at March 14, 2007 01:46 PM


Seemed very mild number and falling, and reinforces the position that there aren't great wage pressures out there.

IIRC the BOE have estimated 4.5% wage inflation excluding Bonus, is consitant with 2% CPI

Sorry I can't find the link, but its mentioned here, page 2

And they refer to it being mentioned in some minutes here, back in 1998 (so consitant with 2.5% RPIx)

"The ONS originally estimated that average earnings grew by 4.5 per cent in January, a figure that is "only just consistent" with the inflation target, according to the minutes. "

Posted by: Kingofnowhere at March 14, 2007 02:24 PM