New figures from the Industrial Relations Services (IRS) indicate that pay rises are running below the level of inflation for the first time since April 2005.
Analysis of 134 pay settlements in the three months to the end of June show the average basic pay award was 3 per cent.
During the same period the Retail Price Index measure of inflation stood at 3.3 per cent.
The research also reveals a slackening in the pace of pay bargaining, with 48 per cent of all pay awards worth less than those received by the same group of employees a year ago.
More than a quarter (28 per cent) received a higher increase, with the remaining 24 per cent paid the same in both years.
During this quarter there was no discrepancy between public sector and private sector increases.
However, merit based pay has increased by slightly more than inflation, with the average award standing at 3.4 per cent.
IRS Pay and Benefits editor, Sheila Attwood said: “Rising inflation will put pressure on employers to increase the level of their pay increases. However, ability to pay also plays a part in pay bargaining, with many employers citing rising energy costs as a barrier to higher pay deals.”
