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PUBLIC SECTOR PAY IN 2004-05: GUIDANCE FOR SCOTTISH PUBLIC SECTOR PAY GROUPS
FINANCIAL AND ECONOMIC OUTLOOK FOR 2004-2005
10. Current economic indicators suggest, as was the case last year, the climate continues to be one of moderate and affordable pay settlements. The CPI 2 inflation (the Government's target measure) was 1.3% in February 2004 down from 1.4% in January 2004. Similarly, the RPIX inflation) fell to 2.3% in February 2004, from 2.4% the previous month.
11. The likely prospect is that across the whole economy settlements will continue to be subdued. Continued responsibility among wage setters across both the public and private sectors is essential for economic success; pay settlements will need to continue therefore to be prudent and disciplined.
12. The wider economic outlook should continue to provide the starting point for organisations to consideration this year's remits. However, this does not mean there should be single going rate for all. There will be variations in pay remits and settlements, for example between organisations in different parts of the country, or those organisations which need to recruit different/specialist skills. Remits from individual bargaining units will therefore be assessed on the strength of their business case.
13. Organisations' budgets will also continue to be a key factor in determining pay settlements for the forthcoming year. Pay proposals will need to be affordable within existing spending limits. Affordability and funding is discussed further in this section of the guidance.
Footnote
2 The Consumer Price Index (CPI) is the measure adopted by the UK Government for its inflation target. The Bank of England's Monetary Committee is required to achieve a target of 2% (subject to a margin of +/- one pervcentage point).
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