Pay deals are running at 3.2%, more than 1% below retail price inflation, the figure used by union wage negotiators, according to a new report.
Deals in private firms were slightly higher at 3.5%, according to an analysis of 300 settlements in the last three months by Industrial Relations Services (IRS).
Increases ranged mainly from 2% to 4%, with more than two thirds of awards higher than a year ago.
Unions have reacted with anger to below-inflation pay rises for health and other public sector workers.
Chancellor Gordon Brown told MPs he had accepted recommendations from the pay review body that awards be kept within the government’s 2% inflation target.
Nurses will get a 1.9% rise, while GPs will get no increase. The armed forces will get 3.3% and consultants 1.3%.
The CPI inflation measure targeted by the government is 2.7%. The old Retail Price Index currently stands at 4.2%.
Estimates from the Annual Survey of Hours and Earnings show that the number of jobs paid below the national minimum wage in the UK was 327,000 in Spring 2005, amounting to 1.3 per cent of all jobs in the labour market.
There are three rates for the national minimum wage: one for those aged between 16 and 17 (£3.00 per hour), one for those aged between 18 and 21 (£4.10 per hour) and one for those aged 22 and over (£4.85 per hour). In Spring 2005, 20,000 jobs (4.0 per cent) held by those aged 16 to 17 were paid below £3.00 per hour and 57,000 jobs (3.2 per cent) held by those aged 18 to 21 were paid below £4.10 per hour. Among those aged 22 and over, 249,000 jobs (1.1 per cent) were paid below £4.85 per hour.
Pay increases for millions of public sector workers should be held down to close to 2% to limit the risk of inflation, Gordon Brown has said.
The chancellor has asked the bodies which review pay deals for doctors, teachers and some civil servants to remember the need for wage discipline.
He wants to ensure a temporary rise in inflation does not become permanent.
His warning risks confrontation with public service unions, who say many of their members are paid too little.
Public sector unions such as Unison are signalling they will fight any attempts to impose below inflation rises.
A spokesman for the Public and Commercial Services union said many of its members were not directly covered by the pay review bodies.
But he added: “We do have issues in terms of Gordon Brown saying that when a lot of our members are earning just over the minimum wage…
“Our members will certainly be angry if they are being told they have got to take a real terms pay cut.�?
In his speech, Mr Brown will say he is trying to ensure oil supply rises to meet demand, especially as “oil alone has been responsible for half Britain’s rise in inflation�?.
And he will say the British economy has continued to grow this year while keeping inflation under control.
So what he’s saying is that while prices and cost of living is going up, it is essential that wages don’t and he means for the teachers, doctors etc. Two in my opinion of the most honorable professions. Now how about all those dividends and bonuses flying round. ah well, thing are gonna get tight around here I guess.