According to analysis from the UK online HR resource XpertHR, annual pay rises are delivering a median 2.5 per cent increase. This figure matches the 2.5 per cent retail prices index (RPI) inflation figure for March 2014. Over 2013 as a whole, pay settlements were worth a median two per cent, while RPI stood at 2.7 per cent.
XpertHR studied 215 pay settlements effective in the three months to the end of March 2014.
RPI is the inflation measure most commonly used to gauge the value of pay increases. Consumer prices index (CPI) inflation (the Government's targeted measure) is used less often by employers – and rarely by employees as it excludes housing costs.
Over 2014 as a whole, XpertHR forecast pay settlements to be worth 2.5 per cent for private-sector employees, while many public sector employees will receive an average one per cent rise. Economists expect inflation over the yearto average 2.8 per cent. On the RPI measure, pay awards have been worth less than inflation since December 2009, and 2014 is set to lead to a record fifth year of wages falling in real terms.
XpertHR Pay and Benefits editor Sheila Attwood said: "We are yet to see a return to real terms wages growth. Pay settlement levels remain subdued - at just one per cent on average in the public sector, and 2.5 per cent in the private sector - and an early indication of pay awards concluding in April shows that this level of awards is likely to persist. Over 2014 as a whole pay settlements are likely to fall below RPI inflation."
Responding to the analysis, TUC General Secretary Frances O’Grady said: “It is good to see some signs of better pay awards for some in the private sector, but public sector workers continue to suffer from cuts to their living standards – and millions are still excluded from economic recovery.
“The bigger economic problem remains. The UK has become an economy good at creating poorly paid, low-productivity, insecure jobs but this is no basis for a successful economy for the long term.”