Circular No.

NP/169/16
June 2016

16

To the Secretary, all Branches & Regional Councils

Dear Colleagues

RMT PAY BULLETIN: June 2016

Headline forecasts
Inflation rate: Average new forecast
May 2016 RPI inflation (change in cost of living relative to same time one year earlier)
was 1.4%
For the final three months of 2016, annual RPI (according to the latest forecasts) will
rise to 2%
For the final three months of 2017, annual RPI (according to the latest forecasts) will
rise to 2.8%
Average earnings growth: Average new forecast
Over the course of 2016, average earnings are predicted to increase by 2.5%
Over the course of 2017, average earnings are predicted to increase by 3.2%
Shareholders taking out far more in profits from companies, than the government is in
tax
The sums paid out from companies to shareholders often eclipse the sums the companies
pay to the government in tax. In none of the last 10 years did National Express Group plc
pay more to the Exchequer than it did to shareholders. The differential has reached
record proportions: just 5.9 million paid in tax, compared to 51.6 million paid to
shareholders in dividends (year to 31/12/2014):

Forecasts in detail: RPI inflation1

Predictions for RPI inflation made by a range of forecasters are:
Q4 2016
Average forecast (non-City): 2.1%
Average new forecast: 2%
Average forecast (City): 2.1%
Highest recent forecast: 2.7%
Lowest recent forecast: 1.2%
Median recent forecast: 2.1%
High RPI Q4 2016 forecasts to quote to employers in pay negotiations are:
Schroders Investment Management (2.7% - forecast made in June 2016), Experian
Economics (2.6% - forecast made in June 2016), Nomura (2.4% - forecast made in June
2016), Bank of America/ Merrill Lynch (2.4% - forecast made in June 2016), CBI (2.4% forecast made in June 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 changes in our members cost of living.

Q4 2017
Average forecast (non-City): 2.9%
Average new forecast: 2.8%
Average forecast (City): 2.8%
Highest recent forecast: 3.5%
Lowest recent forecast: 1.9%
Median recent forecast: 2.9%

High RPI Q4 2017 forecasts to quote to employers in pay negotiations are:

Nomura (3.5% - forecast made in June 2016), Economic Perspectives (3.3% - forecast
made in June 2016)2, Experian Economics (3.2% - forecast made in June 2016); Bank of
America/ Merrill Lynch (3.2% - forecast made in June 2016)

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: 2.5%
Average forecast (City): 2.5%
Highest recent forecast: 3.2%
Lowest recent forecast: 1.9%
Median recent forecast: 2.6%
High average earnings growth forecasts for 2016 to quote to employers in pay
negotiations are:
CBI (3% - forecast made in June 2016), Schroders Investment Management (3% forecast made in June 2016), Oxford Economics (2.9% - forecast made in June 2016),
Economic Perspectives (2.8% - forecast made in June 2016)3, Morgan Stanley (2.7% forecast made in June 2016)

2017
Average forecast (non-City): 3.2%
2
3

https://www.economicperspectives.co.uk/downloads/HMT201606.pdf
https://www.economicperspectives.co.uk/downloads/HMT201606.pdf

Average new forecast: 3.2%

Average forecast (City): 3.2%
Highest recent forecast: 3.9%
Lowest recent forecast: 2.6%
Median recent forecast: 3.2%

High average earnings growth forecasts for 2017 to quote to employers in pay
negotiations are:
Commerzbank (3.6% - forecast made in June 2016), British Chambers of Commerce
(3.5% - forecast made in June 2016), Economic Perspectives (3.5% - forecast made in
June 2016)4, IHS Global Insight (3.5% - forecast made in June 2016)

Recent RMT Settlements

Company

Award

Effective From

Train Operating Companies and Rail freight

London Midland

2% increase. Members whose base salary1 April 2016

is less than 20,000, will receive a 500
increase.
2% increase to all dynamic allowances.
Road Transport and Buses

T M Travel

Drivers
1 April 2016
1.5% increase to most rates (not standard preprogression Monday to Friday rate).
Engineers
1.5% increase to all rates
Cleaners
The non-PCV holder Cleaners pay will rise from
6.70 per hour to 7.20 per hour. PCV holders
Cleaners pay will rise from 6.70 per hour to
7.50 per hour.
London Transport and other Metro

Nexus (Tyne &

Wear Metro)

1 April 2016
1%, including to APT&C salary scales
Long Service Awards will be improved to
200 Certificate and Gift Vouchers for 20
years service and 400 Certificate and
Gift Vouchers for 35 years service.
Flexible work times at all Nexus locations
07:00 to 18:30 subject to the usual
flexible
working
rules/management

https://www.economicperspectives.co.uk/downloads/HMT201606.pdf

controls such that staff flexibility is in

harmony with business needs.
Ships and Docks
Forth Ports

Dockgate
2% increase
Responsibility Payment and Shift
Allowance will also increase by 2%

1 Jan 2016

Towage
1 Jan 2016
2%
The call-out payment will increase from
225 to 230.
Christmas and New Year payments over
eight hours will increase from 731 to
746.
Christmas and New Year payments under
eight hours will increase from 441 to
450.
Hovertravel

Increase of 1.7% or 328 whichever is the 1 April 2016

greater
1 Oct 2016
Additional increase of 0.4%

Recent non-RMT settlements

Company
(Sector)
BMW Mini
(Manufacturing)

Award

Effective From

3.5%

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

Honda
(Manufacturing)

2%

1 April 2016

1 Jan 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 new variant CPIH must be
refused and should be logged with the unions National Policy Department.
Yours sincerely,
6

Mick Cash
General Secretary