Average weekly earnings growth across much of the private sector is running at close to 2 per cent. There are two exceptions to this. One is the lower paying sector of wholesale, retail, hotels and restaurants where pay growth is 2.9 per cent and the other is construction where pay growth is close to zero. Meanwhile, earnings growth in the public sector is around 1.4 per cent.

The latest Average Weekly Earnings figures from the ONS, published on 12 December, actually show that total earnings growth in the private sector rose by 1.7 per cent in the year to October 2012, while total earnings growth in the public sector (excluding the nationalised banks) was 2.2 per cent.

However, these figures continue to be distorted by the re-classification in June this year of 196,000 college staff from the public to the private sector. The ONS has explained that the consequence of this re-classification was to push up average earnings in the public sector by as much as 0.8 per cent and to have a downward impact on the private sector of around 0.2 per cent. The impact is diluted in the private sector as it is four times larger than the public sector.

As the ONS does not currently produce earnings figures excluding the impact of the re-classification, IDS has estimated what we consider to be the actual trends in earnings growth as opposed to the figures published by the ONS. The IDS estimate shows private sector earnings running at around 1.9 per cent and public sector earning growth of 1.4 per cent.

A further point to make is that the latest figures show average weekly earnings growth in the finance and business services sector of just 1.5 per cent. This is the highest paying sector of the economy with average weekly earnings of £613 in October. A year ago this sector had a rate of growth of 3.5 per cent but since January 2012 pay growth has remained subdued, mostly below 2 per cent, with lower bonus pay affecting the figures.