PAY rises in private firms will increase at twice the rate of those in the public sector in the coming year, a report predicts.
The expected inflation rate of 4% later this year will set a benchmark for wage settlements for workers in private companies, say pay analysts Incomes Data Services.
The inflation rate, fuelled by higher domestic energy bills, will lead to pay rises of between 3% and 4.5% in the private sector, the report said.
Meanwhile, the Government's policy for public sector pay was to limit increases to 2%.
An IDS spokesman said: "It is not possible to predict what will happen to pay rises with exact precision.
"But the Retail Prices Index inflation measure is the key to pay-setting in the private sector.
"Inflation close to 4% will be a very strong upward pressure on the level of pay settlements."
The next few months will be a crucial period for long-term pay deals, particularly in manufacturing firms, with a number of settlements set to come to an end, said IDS.
Firms were likely to negotiate new, long-term agreements, the IDS report predicted.