The average growth in workers’ take home pay is just under half of what it was last year, reflecting the ongoing uncertainty in the UK economy, according to a study.
The FTSE 350 Take Home Pay Index, undertaken by payment provider VocaLink and the Centre for Economics and Business Research, revealed that, although private sector take home pay had edged up by 0.1% to 1.7% in the three months to November, average growth for the entire year so far was only 1% – less than half the 2009 average of 2.2% and significantly lower than long-term trends.
Year-on-year public sector pay growth has also fallen from an average of 2.8% last year to only 1.5% in 2010, but dropped again to 1.3% in the three months to November.
Marion King, VocaLink’s chief executive, said: “Unemployment and underemployment has meant there is very little upward pressure on wages. Companies continue to face an uncertain future and, as a result, they are unwilling to make large investment decisions such as increasing headcount.”
They were also reluctant to increase salaries while the labour market remained highly competitive, although there had been slow and steady growth in private sector pay since May, which could be a signal of gradual recovery there, she added.
During the first half of 2010, growth in private sector pay rates halved, hitting a low of 0.5% in May, before rallying in the second half of the year. Public sector pay rates in contrast are expected to fall further during 2011 due to pay freezes and the anticipated fall-out from next year’s Hutton pensions review, which is likely to result in increased employee contributions.
The only clear bright spot was seen in the manufacturing sector. Annual growth in take home pay here jumped from 1.2% in October to 2% in November, double its value in January due to the depreciation of sterling, which made UK goods more competitive internationally.
