Subject: Standard rate of inflation

Is there such a thing as a "standard rate of inflation"? Something that combines CPI and RPI in some mysterious way?

My company is just about to conduct the annual pay review round and whereas in the past they have always used the CPI as the base level for increases, this year for some reason they are switching to RPI. I'm sure it has absolutely nothing to do with the fact that RPI was -0.4% in March whilst CPI was 2.9%.. Last year the equivalent figures were RPI 4.2% and CPI 3.0%.

The announcement from the HR department was that "we have always based our basic increases on the standard rate of inflation" and that that rate is currently "sitting at somewhere around or below zero", so I'm trying to find a way to query the switch from one index to another.

More generally, does anyone consider it bad form for a company to claim to be consistent in its method of establishing the base level for payrises, whilst blatantly picking the lowest rate as it suits them?

I can't stop them doing it, but I want them to know that I know they are just taking the p***. Ever since we got a dedicated HR Director things have gone downhill. I'm moving to the nearest Fascist state...

I suppose you could point out to them that in a years time the RPI is likely to recover to a higher rate than the CPI, and ask whether they intend to stick with it then ? You could also point out that a switch back in 12 months' time would be seen by the workforce as a cynical move, which would lower staff morale, result in people looking elsewhere, resulting in greater costs in advertising and training new staff, so as such would be a false economy.

Or you could just do what the French do and kidnap the HR director.
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Hehe this French story is nice, I've read it from English newspaper, in Poland it wasn't really mentioned. I like the part about not calling the police and just agreeing with whatever they want.

In fact, I'd compare the RPI and CPI over the last 10 years, calculate the difference between the two, and thank the HT department for their generosity. They will be paying you more in the future, after all...

There would be no shortage of people willing to kidnap HR. But why stop there...? We could all do a Spartacus at the trial..

My objection is not so much that they are switching to the lower rate, it is more that they think peopple are so stupid that they won't notice the switch. It is a blatant lie to claim otherwise.

Especially as now they have stopped sickpay for people who HR 'decide' are not genuinely sick, tried to force us to opt out of the 48 hour maximum week, abolished overtime and, worst of all, cancelled the Friday chocolates..
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That is what I am doing right now..

Odd that they are doing that, as... "CPI replaced RPI as official inflation figure in 2003. " according to http://www.thisismoney.co.uk/economy. I would email everyone in the company congratulating HR on a bold move which is sure to result in a better pay rise for everyone next year, once the recession subsides. And then see if they change their minds. The graph on that page shows that of the two rates, RPI is historically higher.

Excellent find. I've already caused trouble with HR over the 48 hour week issue, might as well dig a bigger hole...

Cheers for the spade.

that might help.

Any time you need a complete tool, I'm your man ! ;)
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I've decided to reduce my productivity for the rest of the afternoon in line with RPI x X, where X equals CBA*

*CBA (Can't Be Ar**d) which as of 14:06 15-05-09 stands at A LOT

This is what I don't understand about idiots in places like HR. They spend so much time thinking about how they can save money by screwing the rest of the company over, they don't see the loss of productivity that occurs as a result. I bet your moron HR director is on a nice fat bonus for stripping it to the bone too.

Absolutely. Our Christmas bonuses were slashed by 90% this year and the only reason we got anything, officially, was that the Directors agreed to give up their own Christmas bonuses. Ahh, bless. What the Directors forgot to mention was that their real bonus comes in March and is much, much larger than the token Christmas one. They still paid themselves that one..

Whilst I'm ranting... They have just decided to move everyone's bonus to March from now on so this year's calculation period for profit purposes will run April 09 to March 10. Last year's period was Jan 08 to Dec 08. Is it a concidence that Jan 09 to March 09 was our most profitable ever Q1? I wonder where that profit has gone?
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I make it that someone earning £20k 8 years ago who received annual payrises using RPI would have earned about £9500 more in total than someone earning £20k who recieved increases based on CPI.
They would also have received more in bonuses, given exactly the same performances.
So, long term, the consequences of using RPI, as planned this year, over CPI, are not insignificant, especially as I don't think anyone starts on less than £20k and most earn rather more.
Boo. If I wasn't a capitalist I'd be an anti-capitalist.

They are doing you a favour and they don't even realise. That's short term thinking for you. All you need to do is find a subtle way of making sure they don't switch back. RPI will probably overtake again when the housing market improves.
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Get your HR to put in writing what they will use in future.

Obviously they are unlikely to tell the truth and actually admit they intend to use the lower of CPI or RPI

My last employer didn't allow any inflation increases at all - they increased pay every year in line with what people in Leeds got for similar work - ie they paid what it took to stop you leaving. Sometimes that was more than mere inflation though

the median pay level last year was £24k and a bit

Given that fully half people earn 24k or less I'd guess that starting pay is often 20 or under