The UK is now at a record high for the number of people in employment, but there hasn’t been much of an increase in wagesInflation is now outpacing wage growth, leaving employees out of pocket. The Retail Price Index (RPI) measure of inflation, which includes mortgage interest payments, has surged to 3.7% – way ahead of the average 2% rise awarded to employees – meaning that any pay increases are effectively cancelled out.
Income growth has now been stagnant at 2% for the last six quarters, with the trend of low pay awards dating back to before the recession. Combined with rising inflation rates, this has left the working population with less disposable income and vulnerable to rising prices.
Employers are making moves in the right direction, with pay awards increasing slightly from last year and very low numbers receiving a pay freeze; however, according to HR expert Sheila Attwood, there is no suggestion of pay awards increasing by more than 2% in the foreseeable future.
Salary increases followed an upward trend during the early 2000s and up to 2009, from 3% up to 3.5% and beyond, and pay awards have not been as low as 2% for any significant time period since the second half of 1993. Many experts predict that the RPI will continue to increase and hit workers’ pockets even harder.
The key stats based on XpertHR’s analysis of 3.3 million employees’ pay awards between 1 March and 31 May 2017 show that 50% of all pay awards were between 1.5% and 2.5%. The most common pay award was 2%, which was awarded to 28.5% of employee groups.
Analysis of pay awards across different sectors showed an average 2% pay award in the services, manufacturing and production sectors; however, there is some positive news from the stats, with 42.2% of employees receiving a higher pay award than one year ago. One-third (33.2%) received a lower pay award than last year, while just 4.8% of the employees received a pay freeze.
The issue of public sector pay has been in the headlines recently, with employees working in the NHS, emergency services and teaching professions seeing take home pay decline or stagnate in real terms after 10 years of pay caps imposed by the government. In June, the government voted against removing the public sector pay cap, as proposed by Labour.
Although the government has not officially changed its policy on the public sector pay cap, there are signs that growing public pressure could see the cap, currently set at 1%, removed. Downing Street insiders have been quoted as saying it is ‘under review’.
Removing the public sector pay cap would help to even the playing field between public and private sector employees, with private sector awards higher than those in the public sector since April 2010.
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